Good morning and happy Monday! We start getting back into scheduled housing news tomorrow and have a full week. First today, the hot bidding wars we saw earlier during the Covid pandemic are beginning to fade. In April of 2021 74.3% of single-family purchases were heavily contested. September put in a low for the year at 58.9%. This marks 5 months in a row of declines. Redfin attributes some of this to seasonal causes. The RE market usually does slow down as summer ends.

We’re starting to see cracks in housing prices in several boomtown markets as unsold inventory is being marked down. Areas mentioned include Boise, Idaho and areas close to Denver, Salt Lake City and Indianapolis. This is a sign that buyers in some locales are unable to pay prices that have been on fire for almost 2 years.

In bonds today the 10yr T-Notes are +1/32 to yield 1.63% and in MBS 30yr FNMA 2.50% are +10/32 to $102-11, which yields 2.03% and is +75 to the 5.7yr treasury curve. Have a great day!

Cherry Picks

ARMS / FLOATERS

Cost
$104-01+
$1.98mm+ Fannie Mae 7/1 ARM 2.971%, #841231, 4/50 stated final
Average Life
3.4 yr
Yield
1.61%
Speed
15% CPB
Spread
+60/z curve
Coupon
2.971%
MTR
62
Loans
46
Caps
Periodic 5/2/5, Lifetime 7.971%
Floor
1.622%
1 Yr. Libor
+1.622%
WAM
338
Factor
.7731

10 Year Fixed

Cost
$103-28
$3mm+ Fannie Mae 10yr am 2.00%, #MA4091, 8/30 stated final
Average Life
2.7 yr
Yield
.48%
Speed
353 PSA
Spread
-7/I curve
Coupon
2.00%
# Loans
2,015
Origination
2020
Type
Fannie Mae
WAM
100
Factor
.6762

15 Year Fixed

Cost
$103-08
$4.25mm Fannie Mae Dwarf 2.00%, #MA4279, 3/36 stated final
Average Life
4.4 yr
Yield
1.21%
Speed
235 PSA
Spread
+25/I curve
Coupon
2.00%
# Loans
15,254
Origination
2020/2021
Type
Fannie Mae
WAM
169
Factor
.9966

20 Year Fixed

Cost
$102-04
$5mm+ Fannie Mae 20yr am 2.00%, #MA4446, 10/41 stated final
Average Life
5.4 yr
Yield
1.54%
Speed
242 PSA
Spread
+41/I curve
Coupon
2.00%
# Loans
7,515
Origination
2021
Type
Fannie Mae
WAM
238
Factor
.9966

30 Year Fixed

Cost
$103-04
$10mm Fannie Mae 30 yr am 2.50%, #MA4438, 10/51 stated final
Average Life
5.4 yr
Yield
1.84%
Speed
304 PSA
Spread
+71/I curve
Coupon
2.50%
# Loans
34,631
Origination
2021
Type
Fannie Major
WAM
357
Factor
.9953

Agency CMBS

Cost
$100-17
$11.0mm+ FNMA 12/11.5 DUS #BS3024, 1.91% coupon, 9/2033 stated final
Average Life
11.5 yr
Yield
1.88% + 25/swaps
Speed
0% CPY
Coupon
1.91%
Call Protection
137mo Yield Maintenance
Tier
2
GEO
NH
DSCR
--
LTV
79.4%
OCC
95%
Factor
1.0000

Agency CMO – 3 Year

Cost
$103-16
$5mm Freddie Mac "Busted PAC" 2.50%, FHR 4926 BL, 10/49 stated final
Average Life
3.5 yr
Yield
1.42%
Speed
385 PSA
Spread
+65/I curve
Collateral
New Fannie 30yr 3.50%
Coupon
2.50%
Band
Busted PAC
Avg Life w/ rates +300
19.2 yr
Factor
.5332

Agency CMO – 5 Year

Cost
$105-08
$6.6mm+ Fannie Mae "AD Busted PAC" 3.00%, #FNR 20-11 JW, 3/50 stated final
Average Life
5.7 yr
Yield
1.99%
Speed
385 PSA
Spread
+80/I curve
Collateral
New FNMA 30yr Jumbo 3.00%
Coupon
3.00%
Band
No Band
Avg Life w/ rates +300
19.2 yr
Interest Only until
3/50
Factor
1.0000

Agency CMO – Long End

Cost
$95-05
$4.7mm Freddie Mac "AD PAC" 2.00%, #FHR 5055 PL, 12/50 stated final
Average Life
18.1 yr
Yield
2.33%
Speed
178 PSA
Spread
+40/I curve
Collateral
New 30yr Jumbo 2.00%
Coupon
2.00%
Band
124-270 PAC
Avg Life w/ rates +300
19.0 yr
Interest Only until
12/50
Factor
1.0000

Jim Tait is a registered representative with and offers securities through Hanover Securities, Inc. (Hanover), Member FINRA & SIPC. Although this information has been obtained from sources we believe reliable, we do not guarantee its accuracy, and it may be incomplete or condensed. This is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. Securities that may be shown are subject to availability and changes in price. Past performance is not indicative of future results. Changes in any assumptions may have a material effect on projected results.

 This information from Hanover Securities is for your private use and does not constitute an offer or solicitation with respect to the sale of any security. This information was obtained from sources we believe to be reliable but we do not represent that it is accurate or complete, and it should not be relied on as such. Certain transactions may give rise to substantial risk and are not suitable for all investors. This information was based on current market indicators which may vary over time. We may from time to time buy or sell, or have long or short positions in securities identical or related to those identified herein. 

Although this information has been obtained from sources we believe reliable, we do not guarantee its accuracy, and it may be incomplete or condensed. This is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. Loans and/or Securities which may be shown are subject to availability and changes in price. Past performance is not indicative of future results. Changes in any assumptions may have a material effect on projected results. This information from Banes Capital Group (BCG) and/or Hanover Securities is for your private use, and was obtained from sources we believe to be reliable. However, we do not represent that this information is accurate or complete, and it should not be relied on as such. This information is for institutional investors only, and as such certain transactions may give rise to substantial risk and are not suitable for all investors. This information was based on current market indicators which may vary over time. We may from time to time buy or sell, or have long or short positions in loans or securities identical or related to those identified herein. 

The pricing of loans or any Level II or III asset is inherently an exercise in quantifying uncertain variables. As such, great care should be taken when pricing loans for reporting purposes. The information included herein should never be taken as the sole method, or even a method to be relied on, for the pricing of loans or other Level II or III assets as this is for informational purposes only.