MBS Rally Stalls Again. Reprices for Worse Reported

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Matthew Graham

Rates Strategist, Author, Mortgage News Daily / MBS Live!

A former originator, Matthew began writing for Mortgage News Daily in 2007, covering a wide range of topics. Seeing a need in the marketplace, his focus increasingly shifted toward relating MBS and broader financial markets for loan originators. ... more

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jeff billups

I was just starting to duck tape my float boat back together as well.

Dean Gorenflo

Mortgage Advisor, PHH Home Loans

She just took two QEII torpedoes to the starboard side.

Edgar

blarney27

Sea of Red....everything dumping. Everything except WMT. Good thing this way I can tell my unlocked clients don't blame me-the world markets collapsed.

JRB

JBARRUTIA12

I realize there is still a lot of uncertainty regarding the future of QEII, however I can' t help but feel it's time to push the panic button...

Matt Silver

guindoglin

http://www.youtube.com/watch?v=-22tna7KHzI

Chris Kopec

Suntrust repriced.....hoping my other lenders just decided to start off crappy.

Bryan/Mortgage Finance Group, Inc.

MortgageFinanceGroup

Feds painted themselves into a corner on this one. Pull out of QE2, and rates will spike; stick with QE2, rates spike anyway. They are out of bullets, and so far QE1 and QE2 are unmitigated disaster. Everyone knows what needs to be done to stimulate growth in the economy, but the class warfare statists occupying the white house and halls of congress just won't allow it.

Tyler Kimmey

tkimmey

Hard to believe that just 5 days ago 3.75% on a 30yr fixed was PAR. Now it is at a cost of 3.74pts, and PAR is now 4.375%. When will the bleeding stop? And will we be able to get anywhere even close to where we were last week? Unbelievable!!! And to top it all off, another reprice for the worse!!!

Nyalls Smythe

Heard dealers on the street yesterday offered $29 billion in treasuries on the Fed's $ 7 billion offer. Also heard foreign countries are dumping agencies as fast as they can.

Adam Miller

Vice President of Mortgage Lending, Guaranteed Rate

where is the website that outlines the purchaseing of MBS and bonds? I think AQ has mentioned it in a couple of posts but no links. I am interested in seeing how much the gov't has spent so far and what they have purchased. This is the 3rd day of QEII... why the panic? we have 590 billion more to spend!

Gary Powell

GaryP

Bryan, QE1 was a disaster? Do you recall where rates were in early Nov. of 08? Instead of talking about 3's nd 4's, I recall 6's and 7's. When the Fed jumped in during Thanksgiving week of 08, rates took a huge plunge and basically stayed at least in the low 5's. Admittedly, the results of QE2 are still up in the air but I have a hard time seeing your logic as far as QE1 is concerned. No, QE1 didn't have the stimulatory effect that was hoped, but it sure kept things from getting worse. The current administration's repeated attempts to shoot themselves in the foot over health care, taxes, and cap/trade had a lot more to do with the lack of recovery than did QE1, IMHO.

Roy Paeth

Love this headline on CNN Money. U.S. stocks tumbled, with all three major indexes down 1.5%, as concerns about Europe's financial problems continue to rattle investors. So if investors are rattled by Europe where is the flight to the US?

Robert Jones

raldenjones

It's a comin back! I love rolller coasters, just not this one.

Gary Powell

GaryP

I think that the dumping of bonds is being caused by two things. Inflation jitters that may be alleiviated by tomorrow's CPI numbers, and more so, China's anticipated increase in rates. I'm betting that there will be a flow of cash from the US to China.

Kent Taylor

Sales Mgr./Mortgage Loan Consultant, First United Bank Mortgage

Even 'Buy the Rumor, Sell the Fact' explanation is feable now - 10 Yr exceeds the level in August when Fed started signaling QEII - this is a confidence issue for sure!

Mike Simone

Ok here's my situation, I'm looking to close on a home end of Dec. and I haven't locked in yet, should I wait this out and take what I can get right now?

Chris Kopec

Mr. Simone.....find a rate that you are comfortable with. Ask yourself: Will I be more upset if the rate went up, or more happy if the rate went down? Proceed accordingly.

Adam Dahill

WCS Lending

Just took a 10day lock for 37cents. Something is better than nothing and my clients are getting what they applied for.

Larry Gray

Senior Mortgage Banker, Clear Lending/Div. of PRMI

"Paul Ashworth, senior US economist for Capital Economics, said the lack of consensus among Fed policymakers is in itself another problem. He argues it will probably mean the Fed won't wind up agreeing to purchase as much assets as necessary to help the economy." - from CNNMoney.com I can only believe that things will calm down as people start to believe there are "no serious inflation threats" and that QE2 finally has the effect we are looking for, or at least does no harm. I really think at the very least it causes no harm. A vacation would be nice now?

Edgar

blarney27

What's that I smell....flash crash brewing? You know investors are thinking that as we are now down nearly 2% in t he equity market.

Chris Kopec

I'm just hoping things settle down in time for the inevitable lock extensions coming around the corner in early/mid December.

Roy Paeth

Thankfully most of mine are locked up but I have a few clients who called yesterday interested in moving forward at the 4% rate I had offered over a week ago. They were not happy to hear where rates are at now.

Mike Simone

Thanks Owl obviously I'm waiting for a lower rate and I'm ok with not getting 4.25% all I'm asking for is 4.5% but not sure if I have the time.

Chris Kopec

The haven't been this upset since the ending of "Beaches".

Chris Kopec

Mr Simone.......4.25% could make a comeback....but I wouldn't bet the ranch on it. Is your LO offering 4.500% right now? Does your lender have a float-down/renegotiation policy? If they do, find out if you could lock at 4.500% and get a float-down opportunity prior to closing. If you are clear to close toward the end of December, your LO might have a bullet left.

Adam Janik

adamjanik

Hey Mike everyone would like the lower rates to come back. The sooner the better. "Lower Rates" is a relative term . Last year 4.875% and 5% were great deals. If you have time to wait things out then great, it not, anything under 5% is still a great rate.

Nyalls Smythe

Breaking news on CNBC- "Steeper yield curve likely to benefit banks!" It should have included the ending- "while hosing everyone else."

Mark H

mhandgis1

Hey Jeff, it is duct tape. It is used to tape duct work together. I have found it works great for keeping my car together and keeping my kids quiet as well, ha! As for my floating pipeline, I am sprinkling lighter fluid on it right now and will toss a match on it shortly.

Chris Kopec

Looks like the Fed will be buying the 10's tomorrow..... http://www.newyorkfed.org/markets/tot_operation_schedule.html ......If we can tread water a little bit, maybe we can find some positive traction shortly.

Adam Janik

adamjanik

Mark you are right in that it is duct tape but there is a company called Duck that makes a lot of tape products. Happy day, you are both right.

Mike Simone

Owl and Adam currently I'm at 4.675% no points. My LO doesn't offer a float-down. What about a 5/1 arm?

Sisyphus Hoy

It seems in the past Treasuries and MBS is where the money went in these huge sell offs - and on the mortgage side we could anticipate benefits. It was pretty predictable: equities selloff = Treausury / MBS gain and reprices for the better. Apparently this doesn't apply any more? Key questions: where is the money going? Is it reasonable that it will "reset" or have investors abandoned the traditional "flight to safety" ?

Adam Janik

adamjanik

ARM products are not for everyone. How long do you plan on staying in your home? There is no telling where rates will be in 5 yrs. You can go with the philosophy of "there will always be another ARM product to refi into" or "Go for fixed and forget about it". Contact your LO about 5/1 or 7/1 ARM rates so you can make an informed decision.

Brett Boyke

Senior Mortgage Associate, First Centennial Mortgage

I think the foreign buyers are giving us the finger, taking their cash and going elsewhere

Rene Rapalo

Fundn

Mark H, I don't believe our floating pipelines will require lighter fluid.... they are going up in flames all on their own!

Mike Simone

Thanks Adam I may just ride this roller coaster a couple more days, I can't do it much longer as I'm getting sick to my stomach.

Chris Kopec

Mike...if you are planning on staying in the home for a while (i.e., 7+ years), go with the 30 year. 4.675%. (or 4.625%?). Unless things continue at the current (Hindenburg) trajectory, I'd imagine that sort of rate will be on the table for a little while longer. Find out if that's a 60 day quote....keep in mind you may be inside the 45 day window now, or in the next couple days. And then, the 30 and 15/10 day lock windows will open up as well. Like Adam remarked, 4.625% was once a Rock Star Rate. If your peace of mind is the most important thing right now, you'd still be at a rate may be impossible to get within a few months. Another thing to keep in mind is what your qualifying rate is. Make sure you have enough elbow room with respect to debt ratio....you don't want to price yourself out of a loan approval, particularly on a purchase. If that's an issue, then it makes my lock bias even stronger. Whenever I'm in doubt, I remember what Kasey Kasem always taught: "Keep your feet on the ground, and keep reaching for the stars".

Marty Sonke

Besides that market finding a new consensus on the direction of the MBS trade, which IMO is a good thing, the other upside to this is that turntimes should get a lot better. One concern I have is not whether rates will get a lot better but when. Remember last year towards the end of December when trade flows became extremely thin and rates blew out? I am thinking that we have a couple/few weeks in December to lock and doc before rates blow out again. Then towards mid to late January I could see things getting better again as bond participants return back to work. One other point as well is that people in our industry are so freaked out right now that when rates do get better I expect a heavy volume of locking. My best advice is that as soon as you see your rate and premium again, lock'er up. The volatility trade is killing us right now. If Ireland announces that they are accepting the bailout does that do enough to help things settle down?

Adam Janik

adamjanik

Mike welcome to our world. It is tough talking to clients about a certain rate and then having to tell them the rate is not there a couple days later. If you are comfortable with any rate below 5% then play the float game. It could pay off with getting the rate you want or you could end up a little worse off. If you will not accept anything above 4.625% then it is time to lock. Good luck and I hope you can yell "winner winner chicken dinner" when the dust settles.

Brett Boyke

Senior Mortgage Associate, First Centennial Mortgage

No flight to safety is really concerning, markets are down about 2%, normally we would be have a huge drop in the yields and corresponding jump in MBS.

Chris Kopec

I just hope we aren't getting set up for a 3rd straight afternoon a##-kicking

Andy On The Lake

AndyOnTheLake

Brett's point can't be overstated. With this severe drop in equities, NOT seeing some relief buying (flight to safety) in the 10 yr is an extremely bad sign. The markets have decoupled. What's going to happen when the stock market turns around?

Gary Powell

GaryP

Andy, the bond market has been disconnected from equities for quite a while now. Besides, rememer when the 10 yr. Tsy went over 4% earlier thi year. Look at where its at now. Eventually there will a correction. The question is how long we will endure the pain. I'm hoping that tomorrow's CPI # will help push the correction. The PPI today seemed like it stopped the melt down.

Milton Manos

Dont worry fellas, at the end of the day money has to go somewhere and Im still betting it will flow in the US.

panzer

logan3030

http://www.youtube.com/watch?v=S8H2FIf1oH4

Chris Kopec

I'm not sure if this will help, but I have now locked/extended my entire pipeline. If history is any guide, that means reprices for the better should follow soon.

Jeremy Struzik

I'm not too concerned with the equities being down so much and bonds being sold at the same time too. I think there is much anticipation looming on tomorrow's CPI. People are just pulling out right now and holding it in cash right now until tomorrow. If the CPI comes in lower then forecast I think people will realize maybe the fed is on the right track. however there still are the nay-sayers that are more concerned in the long term then the short term.

Dereje J

Amazing, how the market are changing within days. I thoght the decision I have made on November 4th could be regrettable. Unforunetly, it paid off. I locked @ 3.875% on 30 fixed refi. If I were at Mike's position today, I will forget refinancing and do my private work. D.

Rich Krupnik

RichKrupnik

Isn't that typically the case Owl?? You finally decide to stop the bleeding and just jump in and lock the pipe- Then out falls the floor on rates... Beware of those phone calls from your clients watching the rates!

Roy Paeth

Thanks for taking one for the team Owl.

M P

way to gloat there, dereje.

Chris Kopec

Yeah, it is what it is, guys. I'd rather take a pipeline haircut and close some freebies than deal with irate clients. And this gives me the opportunity to focus on getting my locked loans closed.

Chris Kopec

And fortunately, the majority of my stuff was locked just prior to the NFP report, so the damage has been pretty well contained.

Scott Valins

Sr. Mortgage Consultant, All County Capital Corp

a few interesting bits from this cnn article: http://bit.ly/byL7aO Those inflationary concerns in particular have been behind the recent Treasury selloff that has sent yields surging to three-month highs. The Fed tried to defeat those fears Tuesday, with New York Fed president William Dudley telling CNBC that the central bank's bond purchases will not create a long-term inflation problem. "People do not understand clearly [that] we can have an enlarged balance sheet and not have a long-term inflation problem," he said. "I don't think that realized inflation like CPI is likely to surprise meaningfully to the upside for a while," Cronje said. "It's inflation expectations in the future that matter. Inflation can become a self-fulfilling prophecy if expectations are not kept in check." "There's been a lot of head scratching going on," said Richard Bryant, head of Treasury trading for MF Global. "What was the catalyst? Who were the sellers? I don't think anybody understands the current price movements.

Matthew Graham

Rates Strategist, Author, Mortgage News Daily / MBS Live!

phew... took me long enough, but new post is up... Great discussion going on here btw guys... 53 comments so far?! Just like the jingle goes for where I'll be eating lunch, "da da da da da, I'm lovin' it"

Brian Angarone

Roni22

Dereje you come on here everyday talking about your 3.875% rate lock.. Congratulations but enough with the gloating..

Scott Valins

Sr. Mortgage Consultant, All County Capital Corp

MG not seeing new post yet

JOHO

jhoward

McRib it up Matty G!

Craig Anderson

Craiga

I think that we all need a Happy Meal.

Dereje J

Brian and M P, I shared a success story after following this blog for more than two weeks. I have no malicious intent!!!!

Dustin McAlister

Mortgage Loan Officer, BNC National Bank

Wow it is pretty funny you guys thought the exact same thing i did before i read that far. It does seem like you are on here all the time talking about the 3.875% D. Hopefully you actually close at that rate.

Dustin McAlister

Mortgage Loan Officer, BNC National Bank

Although I am pretty happy i snagged 3.5% on my 30 year fixed refinance as well. Glad i locked nov 3rd.

JOHO

jhoward

This guy thought he would regret a 3.875% lock on a 30yr fixed? How ridiculous, out of touch, and greedy can one get? So typical of some people. Exactly why I stopped taking Lending Tree leads a year ago!

Matt Silver

guindoglin

DJ...We are all very happy for you..Job well done..Now let us concentrate on the big picture and not your individual situation..Your beating a dead horse..and actually making your self look like a @!#$%^&..my .02 cents

Rich Krupnik

RichKrupnik

Reprice for the better!!!!

Michael Becker

mbeckerp

Matt, I could not agree more with your comment to DJ, but in my opinion worse than that are the LO's who post that they locked their entire pipeline up before the worsening in pricing. It's like squeezing lemon juice in the paper cuts of the rest of the LO's who for one reason or not have a bunch of loans floating. Let's make a pack not to do that.

Jason

jandrews1010

HAHAHA!!! I love it. Dereje J comments are killing me over here. Good thing for his LO rates didn't drop an 1/8th below where he locked him in at... DJ would have jumped ship on him and locked in with another lender in a second. Glad you're finally happy with that 3.875% rate you got there big guy! Hilarious.

toddlipps1

toddlipps1

http://www.youtube.com/watch?v=eq5qpimCssg

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