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MBS RECAP: Mortgage Market Rocked by Instant Doubling of Regulatory Fees
Aug 13 2020, 5:42PM

Consider this: the average guaranty fee (charged by Fannie/Freddie to ensure timely payments to investors), including upfront LLPAs and the ongoing fees built into monthly payments netted the agencies roughly 48bps in Q2.  In one abrupt announcement last night, they added 50bps for refis, more than doubling their take.  Purchases got caught in the crossfire.  It's a big mess for the moment.  The last 8 minutes of today's video talks all about it.

Econ Data / Events
Market Movement Recap
08:19 AM

Bonds were stronger at first in the overnight session, but Treasuries began losing ground after 5am ET.  10yr yields are now 1.35bps higher on the day at .6866 (notably still under the .69% pivot point).  MBS are outperforming significantly, up more than an eighth of a point at 103-05 (103.16).

01:23 PM

MBS had been holding up fairly well but they are tanking now, largely in response to a broader tanking in the bond market following the weak 30yr auction.  2.0 UMBS are down a quarter of a point from this morning.

02:16 PM

Bonds continue to tank, led by Treasuries, but mortgages are grudgingly following.  UMBS down more than a quarter vs this morning.  Widespread reprices.  10yr up more than 5bps to .7257.


MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
UMBS 2.0
102-30 : -0-03
Treasuries
10 YR
0.7175 : +0.0315
Pricing as of 8/13/20 5:39PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
1:21PM  :  ALERT ISSUED: More Negative Reprice Risk
1:09PM  :  Weak 30yr Auction; Bonds Losing Ground; MBS Holding For Now
11:23AM  :  ALERT ISSUED: Negative Reprice Risk Increasing
8:57AM  :  No Reaction to Econ Data; Treasuries Weaker, MBS Stronger (But Off Highs)

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Bette Miller  :  "Partners, All of you – should take 2 minutes and tell Congress that you shouldn’t tax homeowners trying to save money be refinancing during a pandemic just to achieve your political objectives. If this fee sticks – it will hurt the mortgage business all over America. I urge you to take 2 minutes and act now – it’s free, it’s fast and it’s effective."
Bryce Schetselaar  :  "everybody should take all of 30 seconds to have this website send out emails to your senators/representatives. VERY easy. Didn't realize how simple it was until I did it"
Matthew Graham  :  "Hats off to MBA for proactively reaching out to the community last night and again this morning."
Matthew Graham  :  "I just updated lock/float thoughts. cliff notes: if your rates are pretty close to yesterday's, then absolutely. Conversely, if you're clearly looking at a panicked "we'll sort this crap out later" sort of price change, I might take the risk of holding off and hoping for things to settle a bit. Where you draw that line is up to you, but anything worse than an eighth of a point in rate or 50bps in price (assuming the new LLPA is showing up, lets call it 80-90 bps otherwise) is getting into that territory."
Matthew Graham  :  "I'm thinking that people really aren't appreciating that this is a $1500 tax (on average) on millions of homeowners and (due to the pricing implementation so far) many prospective homeowners. I'm seeing almost no coverage outside of industry-specific publications. Imagine the outcry if, let's say 1/5th of the population was just told the government was going to take $1500 from them."

Economic Calendar
Time Event Period Actual Forecast Prior
Thursday, Aug 13
8:30 Jobless Claims (k) w/e 963 1120 1186
13:00 30-Yr Bond Auction (bl) 26
Friday, Aug 14
8:30 Retail Sales (%)* Jul 1.9 7.5
10:00 Consumer Sentiment Aug 72.0 72.5

About the Author

Chief Operating Officer, 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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Rates went up. Out of nowhere.
 

More From MND

Mortgage Rates:
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  • 15 Yr FRM 2.62%
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  • Jumbo 30 Year Fixed 3.35%
MBS Prices:
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  • 30YR FNMA 5.0 109-17 (0-00)
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  • 30YR FNMA 5.5 110-13 (-0-08)
Recent Housing Data:
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  • Purchase Index 3.42%