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Reprice Risk? Depends On Original Rate Sheet Timing
Posted to: Micro News
Thursday, February 7, 2013 1:10 PM

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This morning's price action presents a bit of a problem for some lenders. We rallied to what were, at the time, 2-day highs by the time the earliest round of rate sheets came out only to continue rallying through most of the 10am hour (Stocks/Bonds/Euro/Everything bounced between 10:52 and 10:55am). The closer to that time window that an initial rate sheet came out, the more possible the negative reprice risk--a fact that one lender just reminded us of with a reprice despite stabilizing levels around the highs. That lender's rate sheet came out at the worst possible time of 10:54am.

As of right now, MBS are still in the green and Treasuries are trying to fight off a break above an important short term pivot at 1.953 (currently 1.9479). Bond markets are not looking "weak" right now, per se, but any additional selling would change that assessment.

As far as other lenders' reprice risk, take a look at when you got the rate sheet, as well as it's relative strength compared to yesterday. The stronger the improvement and the later the print time (up until the aforementioned late 10am time window), the greater the risk. Beyond that, we're keeping an eye on the Treasury pivot, and would hesitate to rush to lock unless we're breaking noticeably higher than 1.953 and Fannie 3.0s dip into negative territory at 103-13.

The only other consideration is roll-day tomorrow, and it's a Friday. Pricing could be conservative and pricing strategies may vary. Unfortunately that may mean that the better offerings for some lenders would be dependent on this strength/stability lasting into the beginning of next week.

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Mortgage Rates:
  • 30 Yr FRM 3.61%
  • |
  • 15 Yr FRM 2.95%
  • |
  • Jumbo 30 Year Fixed 3.45%
MBS Prices:
Recent Housing Data:
  • Mortgage Apps -2.58%
  • |
  • Refinance Index 0.28%
  • |
  • Purchase Index -7.02%