Good morning and welcome to the weekend! All the scheduled releases for this week are done, so we have some other topics to cover. First up, Pending Home Sales released yesterday for Sept. It was slightly disappointing with a drop of -2.3% when the street was looking for a +0.5% rise. The blame is being attributed to higher interest rates. Overall, Pending Home Sales were 8% lower than a year earlier.

Second up is a look at millennial contribution to the red-hot housing market. As the housing rally has matured during the Covid era, Millennials have taken some of the reins from Boomers and Gen- X’ers. People aged 25 to 39 years have received 380 million in stimulus money and their net worth is higher than Gen-X was at the same age. A year ago, you would have heard us talk about how millennials were being left behind in housing, not quite the case in 4th quarter 2021. Going forward, their contribution should become much more noticeable.

Bonds today are up small, with the 10yr T-Notes +2/32 to yield 1.57%. In MBS 30yr FNMA 2.50% are -8/32 to $102-15, yielding 2.00% and +69 to the 5.7yr treasury curve. That’s it from us today, have a great weekend!

Cherry Picks

ARMS / FLOATERS

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

10 Year Fixed

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

15 Year Fixed

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

20 Year Fixed

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

30 Year Fixed

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

Agency CMBS

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

Agency CMO – 3 Year

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

Agency CMO – 5 Year

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

Agency CMO – Long End

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

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.