Good morning and happy Monday! Scheduled news comes in tomorrow, but today we have some interesting changes in the housing market.

Mortgage fraud is on the rise in 2021, particularly in purchase applications. We’re seeing some type of fraudulent activity in 1 of every 90 applications, which is a 40% increase over 2020. The highest incidence was found in investment properties, where 1 in 23 applications was tainted. Several stories are circulating about the recent jump higher in mortgage rates. We’re now at 3.14%, the highest rate we’ve seen in 8-months. The biggest point they’re making, however, is that rates are still low by historic standards. 30yr conforming rates got to the 4.80% range during the last rate cycle.

Re-enforcing this feeling is news that one of the men most well-known for predicting the 2007 housing crash, Barry Habib, is now on record calling for home prices to continue rising. He’s considered one of the best housing market timers, winning Zillow’s “Crystal Ball Award” multiple times! He says the big difference now compared to then is current lack of supply.

Bonds today are down, with 10yr T-Notes -9/32 to yield 1.58%. In MBS 30yr FNMA 2.50% are +3/32 to $102-22, which yields 1.88% and is +81 to the 5.1yr 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.