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No New Weakness, but Reprice Risk Could be Growing
Posted to: Micro News
Wednesday, July 02, 2014 12:29 PM

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Occasionally there are viscerally-motivated reprice alerts.  This is one of them.  Most lenders aren't at risk, but soon could be--at least to some extent.

Here's why (in bullet points):

  • tight range post-sell-off this morning for MBS, but favoring the lower end of that range now
  • Treasury benchmarks progressively weakening.  This makes it harder for MBS to continue to hold ground, and savvy lenders are aware of those risks to the price outlook
  • liquidity getting to be more of an issue as the week's only other active trading is unanimously slated for after tomorrow's NFP (lenders are more cautious amid illiquid trading conditions).
  • actual, current prices are pretty close to levels normally associated with negative reprice risk anyway, but in the presence of the other bullet points, risk "feels" a bit higher.

Long story short, prices don't necessarily justify negative reprice risk, but it will probably take less than normal in terms of losses to justify negative reprices for some lenders today.




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Mortgage Rates:
  • 30 Yr FRM 3.94%
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  • 15 Yr FRM 3.12%
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  • Jumbo 30 Year Fixed 3.88%
MBS Prices:
  • 30YR FNMA 4.5 108-10 (0-00)
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  • 30YR FNMA 5.0 110-19 (0-01)
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  • 30YR FNMA 5.5 111-17 (0-00)
Recent Housing Data:
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  • Refinance Index 10.63%
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  • FHFA Home Price Index 0.67%