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There's no doubt you'll see excellent mortgage rates when this morning's rate sheets come out. Many lenders will be at or below their previous all-time lows. Many others will be slightly above. And on average, rates will remain in trend that's better described as flat instead of falling .
What's wrong with that? Nothing really-- especially when rates are in line with record lows. There is something that's interesting about it though, and it's easy to see when we compare MBS price movement to average rates.
Because MBS trade in price, the easiest way to see correlation with rates is to invert one of the lines (otherwise they'd move in opposite directions). All that to preface the following chart which shows UMBS 2.0 prices inverted (the lower the orange line goes, the higher MBS prices are). During more normal times, mortgage rates and the MBS line would be right on top of each other. This time, not so much.
I'm not giving you this heads-up to frustrate anyone or to make you pound your fists on the table and demand lower rates. Quite the opposite! This chart should be exciting. If lenders tried to run this race like the hare, they'd cause bigger problems for prepayment speeds than we're already seeing. The athletic tortoise approach is what will give you and your clients the best combination of low rates and stability. And to be sure, rates can and will move lower if MBS remain in this territory. But the most exciting part is the implication that rates have some insulation against any potential bond market weakness--something we'll start to look out for if 10yr yields make a strong move back up and over the recently broken range boundary at .58%.
Today is the last trading day of the month. As such, there can be some seemingly random momentum due to certain compulsory trades among money managers with deadlines to meet. MBS Live members can read more on that in this primer.
MBS Commentary
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There's no doubt you'll see excellent mortgage rates when this morning's rate sheets come out. Many lenders will be at or below their previous all-time lows. Many others will be slightly above. And on average, rates will remain in t... (read more)
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Mortgage Rate Watch
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Mortgage rates improved nicely overnight. The average lender's morning rates were very close to the lowest levels ever . This was a distinct possibility based on yesterday afternoon's bond market movement. Mortgage rates are most directly influenced ... (read more)
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Rob Chrisman
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Whether it is Northern Virginia or Lake Tahoe , we’re running out of houses. The pandemic has caused a buyer feeding frenzy away from apartments and city cores. Heck, I can hardly wait to sell my house! The problem is… where would I live... (read more)
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Housing News
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The performance of mortgage loan servicers is lacking in the eyes of many of their customers, even this early in the pandemic driven recession. J.D. Power's 2020 U.S. Primarily Mortgage Servicer Satisfaction Study found customers reporting long wait ... (read more)
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Housing News
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Both government supported enterprises (GSE) reported increased profits in the second quarter of 2020 compared to Q1. Fannie Mae said its net comprehensive income was $2.53 billion compared to $476 million and Freddie Mac's quarterly results were 1.94... (read more)
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Housing News
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Pending home sales soared again in June, although the liftoff was relatively shallow compared to the 43 percent increase in May. The National Association of Realtors'® (NAR's) Pending Home Sales Index (PHSI). The index, a forward-looking indicato... (read more)
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