[MBS Commentary] – MBS RECAP: 12/30/2011

Secondary Marketing Managers:
If you are interested in gaining access to the most accurate real-time back-month TBA indications from Thomson Reuters and Tradeweb.  LEARN MORE

MBS RECAP: 12/30/2011

Posted to: MBS Commentary
Friday, December 30, 2011 4:19 PM

Forward this email:  Send a copy of this story to someone you know that may want to read it.

MBS Live: MBS RECAP
Open MBS Live Dashboard
FNMA 3.5
102-27 : +0-03
FNMA 4.0
105-02 : +0-06
FNMA 4.5
106-13 : +0-03
FNMA 5.0
108-01 : +0-04
GNMA 3.5
104-14 : +0-04
GNMA 4.0
107-08 : +0-05
GNMA 4.5
108-30 : +0-02
GNMA 5.0
110-24 : +0-03
FHLMC 3.5
102-21 : +0-04
FHLMC 4.0
104-29 : +0-05
FHLMC 4.5
105-31 : +0-04
FHLMC 5.0
107-15 : +0-04
Pricing as of 3:01 PM EST
Afternoon Market Updates
A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBS Live Dashboard.
2:13PM  :  ALERT: Happy New Year and Thanks For a Fantastic 2011

This year essentially marked the birth and infancy of the MBS Live product. What an honor it’s been to be a part of this community!

Bond trading in 2011 is now officially over and next week, although not beginning until Tuesday the 3rd, will otherwise waste no time in ringing in the new year as it boasts both ISM Manufacturing and FOMC Minutes. There are no Treasury Note auctions next week, but Friday brings the Employment Situation Report–the first one we’ve had since the marked turn for the better in weekly Jobless Claims. It will be a good acid test as to how much impact markets perceive from domestic data vs European undercurrents in the new year.

As has been mentioned in the live chart on the dashboard (for any of our mobile audience that may have missed it), beware the “pipeline control” reprices for the worse not only this afternoon with rates/fees basically at their all-time best levels, but also into the new year as trading volume and lock volume are likely to pick back up. The potentially negative scenario would be to see the world wake up next Tuesday and think “oh yeah! I forgot NFP was coming up this Friday, so maybe I’ll start building in a bit of a concession.”

That sort of speculation is a bit out of our comfort zone, but just something to keep in mind amid what seems like an endless sea of MBS Positivity. Speaking of that, make sure to check out the latest MBS Commentary for some long term charts/thoughts on 2011 and musings about how the spread situation could play out into 2012 (linked below). Otherwise, THANK YOU for an awesome 2011 and from the MND Family to yours, we hope 2012 is even better. Happy New Year!

Featured Market Discussion
A recap of the featured comments from the Live Discussion on the MBS Live Dashboard.
Oliver S. Orlicki  :  REPRICE: 2:12 PM – Sierra Pacific Worse
Dan Clifton  :  REPRICE: 1:50 PM – Flagstar Worse
Gus Floropoulos  :  “We started 2011 with the 10 yr surging to 4%, ending with it under 2%. “
Jeff Anderson  :  “GM, All. Happy New Year to all. Thanks to MND for dropping knowledge all year. Best Site in 2011! “
Sam  :  “Happy New Year to all the MND addicts and MG!”
Chris Kopec  :  “Happy New Year to everyone.”
Jason Wilborn  :  “Happy New Years Eve Eve”

(READ THE FULL POST)

 

More from MND:

 

If you have trouble viewing this email, you can read the full post at http://www.mortgagenewsdaily.com/mortgage_rates/blog/241553.aspx

You were sent this email because you opted to receive email alerts when a new article was published to this Mortgage News Daily channel. To adjust your email settings:
Manage Your Email

Unsubscribe from all Email Communications

Forward this email:  Send a copy of this story to someone you know that may want to read it.

[Mortgage Rate Watch] – Mortgage Rates End The Year At Historic Lows

Secondary Marketing Managers:
If you are interested in gaining access to the most accurate real-time back-month TBA indications from Thomson Reuters and Tradeweb.  LEARN MORE

Mortgage Rates End The Year At Historic Lows

Posted to: Mortgage Rate Watch
Friday, December 30, 2011 1:45 PM

Forward this email:  Send a copy of this story to someone you know that may want to read it.

Mortgage Rates have been operating in the 3.875% best-execution range for several weeks now with the only day-to-day variations being seen in the area of closing costs.  That continues to be the case today and in fact, at many lenders closing costs associated with the 3.875% best-execution levels have fallen in line with their lowest levels ever–truly a fitting end to 2011.

Today’s BEST-EXECUTION Rates

  • 30YR FIXED –  3.875%, glimpses of 3.75% at the top few lenders.
  • FHA/VA -3.75%
  • 15 YEAR FIXED –  3.375%
  • 5 YEAR ARMS –  2.625-3.25% depending on the lender

Lock/Float Considerations

This is “it.”  In a few minutes, bond markets will be closed for 2011 and won’t begin trading again until next TUESDAY (that means that you won’t hear from us on Monday).  The lock/float considerations are essentially the same as they have been.

  • Rates and costs continue to operate near all time best levels
  • Current levels have experienced increasing resistance in improving much from here
  • There are technical reasons for that as well as fundamental reasons
  • Lenders tend to get busier when rates are in this “high 3’s” level and can throttle their inbound volume by raising rates or costs.
  • Trading sentiment in early 2012 could vary from the low-volume positivity seen here at the end of 2011. 
  • While we don’t necessarily think rates are destined to go higher, given the above facts, there seems to be more risk than reward regarding floating
  • But that will always be the case when rates operate near all-time levels, and as 2011 showed us, it doesn’t always mean they’re done improving.

From the MND Family to yours, we thank you for a great 2011 and wish you a merry and prosperous 2012.  Happy New year!

(READ THE FULL POST)

 

More from MND:

 

If you have trouble viewing this email, you can read the full post at http://www.mortgagenewsdaily.com/consumer_rates/241539.aspx

You were sent this email because you opted to receive email alerts when a new article was published to this Mortgage News Daily channel. To adjust your email settings:
Manage Your Email

Unsubscribe from all Email Communications

Forward this email:  Send a copy of this story to someone you know that may want to read it.

[MBS Commentary] – MBS Going Out on a High Note in 2011

Secondary Marketing Managers:
If you are interested in gaining access to the most accurate real-time back-month TBA indications from Thomson Reuters and Tradeweb.  LEARN MORE

MBS Going Out on a High Note in 2011

Posted to: MBS Commentary
Friday, December 30, 2011 12:20 PM

Forward this email:  Send a copy of this story to someone you know that may want to read it.

September 21st, 2011 was a very important day for MBS, perhaps the most important since the Fed initially announced their intent to purchase MBS outright beginning in 2009.  Until 9/21/11, there were no guarantees of ongoing Fed sponsorship of MBS markets beyond previous QE-related commitments.  The FOMC announcement on 9/21 specifically stated that the Fed would reinvest the principle and interest payments of it’s roughly one trillion dollar MBS portfolio back into the TBA market. 

Here’s a walk down memory lane if you’re interested: MBS ALERT: FOMC Rocks Markets. Reprices For The Better.

the recent widening of MBS spreads may have been effectively reversed today as our namesake made singular mention in the statement when the Fed committed to reinvesting proceeds from MBS payments and payoffs BACK INTO MBS as opposed to elsewhere in the fixed-income world. That’s a huge boon for MBS vs Treasuries.

Bottom line, we think this confirms that it’s safe to get into 3.5’s as the dominant MBS coupon and the statement is the first indication that “it’s only a matter of time. Fannie 3.5’s are up 1 pt and 7 ticks on the day (39 ticks) to 102-29. The previous “concrete ceiling” was 101-25 and is now demolished. 

Reprices for the better should be on the way this afternoon, but keep in mind that lenders can’t just immediately adjust pricing to reflect changes in MBS. It will be a slower and more gradual process than some of us might expect, but average rates in the high 3’s are on the way (probably!). And that should begin with some moderate reprices for the better this afternoon. 

We went on to suggest that this may have marked the moment in time that the recent runaway widening in MBS spreads would see its peak.  All the aforementioned “stuff” turned out to be pretty accurate as far as that whole “predicting the future” thing goes, but even though spreads indeed have gone no higher/wider than their peaks from before 9/21, they have been consolidating in a triangle pattern–storing energy for a breakout in 2012.  This is pictured on the chart below and is the best pictorial “story of the MBS Market” for 2011, and the manner in which this triangle is finally resolved will very likely be the story of 2012.  Note how the bounce in spreads occurred at the somewhat symbolic pivot point marked by the onset of Fed buying.

As far as MBS prices themselves are concerned, they haven’t fallen under the 80-day moving average since they broke above in mid April, and the FOMC meeting in September was a huge confirmation bounce.  Since then, we’ve simply been trending higher and now–with the exception of the “sugar high” produced by the FOMC meeting, are headed out the door at the highs of the year:

10yr yields are similarly not quite back to their “sugar high” levels following the September FOMC meeting (where Operation Twist was announced), but apart from those heady levels are also headed out the door in their lowest territory of the year.  It’s almost uncanny to observe the the very highest yields seen since the late July rally align almost perfectly on a pivot point with the very lowest levels from 2010.  It’s as if a line in the sand has been drawn, delineating “THEN and NOW” as two distinctly different eras.  That might turn out to be very true, but even if it doesn’t, the supportive levels seen around 2.25% and 2.40% in 10yr yields will be good levels to watch as indications that play time could be over (although we could very well be waiting more than just one year for that to happen unless some SERIOUS progress is made in Europe).

Unlike bond markets, stocks have not been operating near their recent extremes, instead favoring something of a middle ground between the year’s highs and lows.  Reducing explanations for this to their most oversimplified format, this could either mean that the US TSY trade is too crowded with EU-inspired flight-to-quality money or that stocks simply have yet to realize the full extent of their EU-inspired pain and are destined to plummet.  Perhaps some from column A and some from column B–in what proportion is anyone’s guess.

 

(READ THE FULL POST)

 

More from MND:

 

If you have trouble viewing this email, you can read the full post at http://www.mortgagenewsdaily.com/mortgage_rates/blog/241534.aspx

You were sent this email because you opted to receive email alerts when a new article was published to this Mortgage News Daily channel. To adjust your email settings:
Manage Your Email

Unsubscribe from all Email Communications

Forward this email:  Send a copy of this story to someone you know that may want to read it.

[MBS Commentary] – MBS MID-DAY: 12/30/2011

Secondary Marketing Managers:
If you are interested in gaining access to the most accurate real-time back-month TBA indications from Thomson Reuters and Tradeweb.  LEARN MORE

MBS MID-DAY: 12/30/2011

Posted to: MBS Commentary
Friday, December 30, 2011 11:19 AM

Forward this email:  Send a copy of this story to someone you know that may want to read it.

MBS Live: MBS MID-DAY
Open MBS Live Dashboard
FNMA 3.5
102-26 : +0-02
FNMA 4.0
104-31 : +0-03
FNMA 4.5
106-14 : +0-04
FNMA 5.0
108-02 : +0-04
GNMA 3.5
104-12 : +0-02
GNMA 4.0
107-07 : +0-04
GNMA 4.5
108-31 : +0-03
GNMA 5.0
110-26 : +0-05
FHLMC 3.5
102-20 : +0-02
FHLMC 4.0
104-26 : +0-03
FHLMC 4.5
105-32 : +0-05
FHLMC 5.0
107-15 : +0-04
Pricing as of 11:04 AM EST
Morning Market Updates
A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBS Live Dashboard.
9:31AM  :  Fannie Mae November Monthly Summary

-Fannie Mae’s Book of Business decreased at a compound annualized rate of 0.9 percent in November.

-Fannie Mae’s Gross Mortgage Portfolio declined at a compound annualized rate of 11.6 percent in November.

-The Conventional Single-Family Serious Delinquency Rate remained unchanged at 4.00 percent in November; the Multifamily Serious Delinquency Rate rose two basis points to 0.60 percent in November.

-The Effective Duration Gap on Fannie Mae’s portfolio averaged zero months in November.

-Fannie Mae completed 16,070 loan modifications in November, for a total of 194,985 loan modifications in the eleven months ended November 30, 2011.

8:49AM  :  ALERT: MBS Open Uneventful, Inconsequential Day At Quarterly Highs

Fannie 3.5’s at 102-28 are as high as they’ve been in 3 months, and higher than they’ve ever been absent an FOMC-induced sugar rush. Even so, today promises to be another low volume and uninspired session, as were the Asian and European sessions overnight. Volumes remain in line with weakest levels in 3 years as far as late December is concerned. For all the sturm and drang surrounding various moments in recent weeks effectively being the last trading days of the year, today has the benefit of actually being that! Not to put too fine a point on it, but it is a bit interesting to note that yields are at the same levels as our first major declaration of “effective year end” around mid-day on 12/22.

Since then, we’ve seen how thin markets and low volume can magnify and exaggerate the will of the few. To that end–and for those who are even still interested in what trading levels might do in such a low volume environment–we’d point out that it’s still possible to see some of that low volume choppiness as various market participants buy or sell whatever it is they might need to buy or sell in order to get that little “11” as the last number on the dateline of their checks.

MBS and Treasuries opened relatively flat and stocks continue to be disconnected, with futures flat to slightly improved. There is absolutely no data of importance scheduled for release today, apart from the release of the next round of Operation Twist purchases from the Fed. Even then, this isn’t the sort of thing that should contain any major surprise and shouldn’t move markets unless amounts and allocations deviate greatly from a tight range of expectations.

Featured Market Discussion
A recap of the featured comments from the Live Discussion on the MBS Live Dashboard.
Matt Hodges  :  “USB .125 better”
Matt Hodges  :  “ST looks to be about .25 better”
Victor Burek  :  “flagstar is .2 worse this morning than yesterday”
Matthew Graham  :  “RTRS- FANNIE MAE- GROSS MORTGAGE PORTFOLIO DECLINED AT A COMPOUND ANNUALIZED RATE OF 11.6 PERCENT IN NOVEMBER “
Matthew Graham  :  “RTRS – FANNIE – FANNIE MAE – COMPLETED 16,070 LOAN MODIFICATIONS IN NOVEMBER “
Matthew Graham  :  “RTRS – FANNIE MAE – COMPLETED 16,070 LOAN MODIFICATIONS IN NOVEMBER “
Matthew Graham  :  “RTRS – FANNIE MAE – CONVENTIONAL SINGLE-FAMILY SERIOUS DELINQUENCY RATE REMAINED UNCHANGED AT 4.00 PERCENT IN NOVEMBER “
Lynn ONeal  :  “Ira..I pulled out of my neighborhood, onto a major hwy without seeing one car. that has never happened before”
Ira Selwin  :  “Roads seemed like everyone took off today except me”

(READ THE FULL POST)

 

More from MND:

 

If you have trouble viewing this email, you can read the full post at http://www.mortgagenewsdaily.com/mortgage_rates/blog/241519.aspx

You were sent this email because you opted to receive email alerts when a new article was published to this Mortgage News Daily channel. To adjust your email settings:
Manage Your Email

Unsubscribe from all Email Communications

Forward this email:  Send a copy of this story to someone you know that may want to read it.

[Pipeline Press] – Experts 2012 Rate Outlook; 2011 Forecasts that Failed; MBS Capital Ratio Chatter; Basel III Thoughts

Secondary Marketing Managers:
If you are interested in gaining access to the most accurate real-time back-month TBA indications from Thomson Reuters and Tradeweb.  LEARN MORE

Experts 2012 Rate Outlook; 2011 Forecasts that Failed; MBS Capital Ratio Chatter; Basel III Thoughts

Posted to: Pipeline Press
Friday, December 30, 2011 8:43 AM

Forward this email:  Send a copy of this story to someone you know that may want to read it.

We wrap up the year with the S&P (a better broad measure of stock performance than the DOW) essentially flat on the year, but 10-yr yields nearly 1.5% lower than a year ago. For 2012 fixed-income traders seem focused on the U.S. election and continued bickering, more regulation in the U.S., Europe and its eventual endgame, where U.S. data shows the economy is headed, will the Middle East ever be stable, and what will happen to China. They are pretty much the same things as a year ago.

So where is the economy, and rates, going? Freddie Mac revealed its outlook, forecasting that U.S. economic growth would likely climb to 2.5 percent over 2012 and that mortgage rates would stay at record lows. “While the headwinds remain strong going into 2012, there are indications the economy and the housing market are gaining ground, albeit slowly,” Frank Nothaft, VP and chief economist with Freddie, said in a statement. The company said that mortgage rates would stay low, with 4 percent for the 30-year fixed-rate mortgage leading the way recently. Nothaft forecasted that recent modifications to the Home Affordable Refinance Program would increase refinance originations by more than $100 billion over the next year, giving a lift to purchase-money biz but letting single-family originations enter a shortfall over the next year.

Another forecast noted, “We expect 2012 to be a fairly similar year to 2011 for the mortgage market. While we expect a decline in residential mortgage volume (forecast a moderate decline in mortgage origination volume in 2012 to $1.1 trillion from an estimated $1.2 trillion in 2011) as refinance activity tapers off, originations should get support from still low rates and implementation of HARP 2.0. The lower volumes will likely lead to weaker mortgage production margins. Mortgage credit is likely to remain stable although we expect increasing delinquency rates on FHA loans. We expect little mortgage market reform through Congress, but there could be some changes driven by the regulators such as the release of a definition of a Qualified Residential Mortgage (QRM) and the introduction of a GSE risk-sharing pilot program.” So noted a research piece from Keefe, Bruyette & Woods, Inc.

Fannie Mae’s chief economist, however, is warning that the United States has a 40% chance of slipping into a double-dip recession in 2012. Recently Doug Duncan predicted a 50% chance of a double-dip recession next year, due to persistently high unemployment and the ongoing housing slump. But an uptick in job growth and stronger automotive and retail sales forced Duncan to revise his dour forecast slightly upward. He does not anticipate the housing market to fully rebound before 2015. And he expects to see plenty of contagion from Europe. One of the major problems is the housing market, he says. In past downturns, home sales have led a recovery, but this time around low interest rates have not pulled mortgage lending or consumer sentiment out of the doldrums. Chronically high unemployment over the next decade and weak income growth will continue to expert pressure on housing prices, he says: “Until employment picks up, you won’t see any improvement in housing.” Check it out.

Rarely do forecasts come true 100% of the time, however, and there were some from last year that did not. There was no double-dip recession in 2011, and the year is ending on a positive note with the U.S. economy is growing at an estimated 3.5-4% annualized pace in the fourth quarter. The European currency union did not come apart in 2011, although it had a few near-death experiences requiring multiple summits. The 11 countries that hitched their wagon to the common currency in 1999 and the 6 that joined subsequently are still together. About a year ago banking analyst Meredith Whitney’s forecast of a large number of municipal defaults failed to materialize, fortunately, with less than $2 billion going into default according to a report from Bank of America Merrill Lynch. In fact, the U.S. Census Bureau just reported that state and local
government tax collections rose 4.1 percent in the third quarter from a year earlier, the eighth consecutive increase.

But disaster is always on the minds of many, and the Federal Reserve issued proposals intended to prevent the collapse of major financial firms. “The proposal would create an integrated set of requirements that seeks to meaningfully reduce the probability of failure of systemically important companies and minimize damage to the financial system and the broader economy in the event such a company fails,” a Fed statement said.

The Federal Reserve released a draft proposal that outlines a change to the liquidity capital ratio (LCR) tests that are included in the Basel III reforms. It is important to note that the treatment of conventional and Ginnie Mae MBS was only one small part of the Fed’s proposal, titled “Enhanced Prudential Standards and Early Remediation Requirements for Covered Companies.” Under the Fed’s proposal, Fannie and Freddie securities would be classified as “highly liquid assets,” the same liquidity treatment as Ginnie Maes. This makes agency MBS more appealing for purposes of attaining liquidity benchmarks. Remember that liquidity capital is not risk-based capital – the 20% risk-based capital weighting for Fannie and Freddie MBS is not going away, which means that the more restrictive capital requirements will remain untouched. For the purposes of risk-weighting, Ginnies are still classified as “Level 1” assets, while conventional MBS are labeled as “Level 2.” The risk weighting assigned to any asset is determined by the Basel Committee for Banking Supervision – not the Federal Reserve. And overseas investors buy Ginnie MBS’s for reasons that have little to do with the Basel III capital requirements. For these investors, the liquidity test is far less relevant than the presence of a full US government guarantee – something that is not going to change any time soon. All this is open to comments for the next three months.

One CEO wrote, “The Basel III regulations show that ultimately I don’t think that the United States banks can say to the world that they don’t have to follow the same rules as everyone else. They can’t say, ‘Hey world, don’t worry about us and residential lending- we know what we are doing.’ The main contention for the Clearing House around Basel III is that it caps tier 1 capital reserves for MSR at about 10% (if my research is correct). This means that a bank like Wells Fargo that has $125 billion in Tier 1 capital would be limited to $12.5 billion in MSR (mortgage servicing rights). Depending on where the MSR is marked (say 4x servicing values, for example, on a Fannie Mae MSR although I think the norm is about 86-100 bps right now), and assuming that the strip is .25%, then the total amount of servicing that Wells Fargo could hold would be somewhere in the neighborhood of $1.25 trillion. This has huge implications. Think about the fire sale of servicing or reduction in production by the larger banks that has to occur between now and 2018 (when Basel III is slated to go into effect). We are already seeing servicing values reflect this uncertainty.”

He continues, “Does it matter that the large aggregators are going to be reducing their holdings of MSR due to Basel III? Why is this good or bad? It will allow free flow of capital from foreign markets because we are all on the same ‘regulatory path’- something we will need for our recovery. This is also the intention behind Dodd Frank of course. It will allow the aging western civilization to match cash flows that suit their lifestyle with something other than treasuries and still have some relative notion of safety – even as credit widens because the concentrated risk in one institution would be much smaller. More players, in the mortgage lending part of banking, mean more competition. This drives cost to the consumer down and it also reduces systemic risk. The servicing value attributed to MSRs is in direct correlation to what a small aggregator can reasonably put on its books. Basically, if someone is out “buying the market” with higher servicing multiples, due to business a differing business strategy or overhead, then this would keep smaller servicers from being able to acquire the best quality loans at a reasonable price.

“But if banks need to make higher yields they are invariably going to chase higher risk assets to do so. The markets ‘are what they are’ and they will need to do this – they can’t just inflate margins on commodities- it will only work in the short run. Too much regulation could lengthen the recession. It could stifle growth of our largest banks and this is not good for a large economy like ours- we need supersized banks to handle massive sized projects that we have in the United States- it’s what makes our economy so incredible. Money center banks are important and we need them to stay relatively large.” So wrote Matt Ostrander, CEO, Parkside Lending, at matt@parksidelending.com.

Turning to the markets, the National Association of Realtors (NAR) announced yesterday that pending home sales in November reached the highest levels seen in 19 months. Many view this number as a leading indicator of the level of sales over the next 30 to 90 days, and is based on signed contracts for home purchases and does not reflect transaction closings. Lawrence Yun, NAR chief economist, said the gains may result partially from delayed transactions – pent-up demand. But any LO will tell you that contract failures have been running unusually high, often due to mortgage approval or appraisal problems.

No one is complaining about mortgage rates, and volatility is pretty low heading into year-end. Yesterday the “benchmark” 10-yr T-note closed at 1.90%, but on the mortgage side MBS prices improved slightly on little supply and continued decent demand. (Remember overnight rates are set by the Fed, mortgage rates are set more by supply and demand.) There was a little news yesterday, but none today – even Europe has quieted down somewhat. The 10-yr is currently trading around 1.90% and agency MBS prices roughly unchanged in the early going prior to the early bond market close and Monday’s holiday.

Dear God –
My prayer for 2012 is for a fat bank account & a thin body.

Please don’t mix these up like you did last year.
AMEN!

If you’re interested, visit my twice-a-month blog at the STRATMOR Group web site located at http://www.stratmorgroup.com. The current blog discusses the time frames for borrowers returning to A-paper status after a short sale or foreclosure. If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

(READ THE FULL POST)

 

More from MND:

 

If you have trouble viewing this email, you can read the full post at http://www.mortgagenewsdaily.com/channels/pipelinepress/12302011-basel-iii-rate-forecasts.aspx

You were sent this email because you opted to receive email alerts when a new article was published to this Mortgage News Daily channel. To adjust your email settings:
Manage Your Email

Unsubscribe from all Email Communications

Forward this email:  Send a copy of this story to someone you know that may want to read it.

[MBS Commentary] – The Day Ahead: No Economic Data of Note and an Early Close

Secondary Marketing Managers:
If you are interested in gaining access to the most accurate real-time back-month TBA indications from Thomson Reuters and Tradeweb.  LEARN MORE

The Day Ahead: No Economic Data of Note and an Early Close

Posted to: MBS Commentary
Friday, December 30, 2011 8:25 AM

Forward this email:  Send a copy of this story to someone you know that may want to read it.

Today promises to be another low volume and uninspired session, as were the Asian and European sessions overnight.  Volumes remain in line with their weakest levels in 3 years as far as late December is concerned.  For all the sturm and drang surrounding various moments in recent weeks effectively being the last trading days of the year, today has the benefit of actually being that!  Not to put too fine a point on it, but it is a bit interesting to note that yields are at the same levels as our first major declaration of “effective year end” around mid-day on 12/22.

Since then, we’ve seen how thin markets and low volume can magnify and exaggerate the will of the few.  To that end–and for those who are even still interested in what trading levels might do in such a low volume environment–we’d point out that it’s still possible to see some of that low volume choppiness as various market participants buy or sell whatever it is they might need to buy or sell in order to get that little “11” as the last number on the dateline of their checks.

MBS and Treasuries opened relatively flat and stocks continue to be disconnected, with futures flat to slightly improved.  There is absolutely no data of importance scheduled for release today, apart from the release of the next round of Operation Twist purchases from the Fed.  Even then, this isn’t the sort of thing that should contain any major surprise and shouldn’t move markets unless amounts and allocations deviate greatly from a tight range of expectations.

Here’s a quick look at MBS prices across the stack as well as charts of 3.5’s and 10yr yields from MBS Live:

 

 

 

(READ THE FULL POST)

 

More from MND:

 

If you have trouble viewing this email, you can read the full post at http://www.mortgagenewsdaily.com/mortgage_rates/blog/241498.aspx

You were sent this email because you opted to receive email alerts when a new article was published to this Mortgage News Daily channel. To adjust your email settings:
Manage Your Email

Unsubscribe from all Email Communications

Forward this email:  Send a copy of this story to someone you know that may want to read it.

MBS Hit Highs of The Month; A Few Good Mortgage Studies

You were sent this email because you opted to receive daily updates from Mortgage News Daily. To adjust your email settings:
Manage Your Email Subscriptions Individually  |  Unsubscribe from all Email Communications

Dec 29, 2011 1:40PM

MBS Hit Highs of The Month, Trading Activity Mostly Dead

As expected/feared, this morning’s economic data did little to rouse holiday-sedated markets. In fact, if it weren’t for the somewhat interesting fact that MBS just hit their highs of the month in Fannie 3.5’s, things look completely dead. But Fannie 3.5’s creeping up into the 102-20’s is good enough for Miracle Max to declare that markets are only “mostly dead.” The following few charts constitute an attempt to bellow enough life into bond markets to at least hear them muster “to blave…” Here…

Dec 29, 2011 11:48AM

A Few Good Mortgage Studies; One Wholesaler Rolls Out HARP 2.0; Investors’ Thoughts on 2.0’s Impact

Who says that folks in the mortgage business can’t rhyme ? If you’re away from your home, and you come back and find that a pipe has burst, and the place is flooding, do you a) fix the leak, or b) raise the roof? I realize that the situation is more complex than that, but the White House plans to ask Congress for an increase in the government’s debt ceiling to allow the United States to pay its bills on time. Didn’t we just go through this? The approval is expected to go through without a challenge…

Micro News

2:38 PM:

MBS Prices at Quarterly Highs. Several Reprices Reported

10:47 AM:

FHFA Statement on Guarantee Fee Increase

10:00 AM:

Pending Home Sales Rise 7.3% to Highest Level in 19 Months

10:00 AM:

Freddie Mac: Mortgage Rates Finish 2011 Near Record Lows

9:55 AM:

ECON: Chicago PMI Threads The Needle Between Consensus and Previous

8:40 AM:

ECON: Jobless Claims and Continued Claims Rise in Latest Report

8:30 AM:

Italian Auction Dominates Overnight Session, but Fails to Move the Needle

10:16 AM:

Stocks Fall on Limited Headlines. Bonds Nonetheless Benefit

Around the Web

Video News

Bank Outlook for 2012

Realty Check: Strong November Pending Home Sales

Pending Home Sales: 19-Month High

Today’s Comments

Kent Taylor

“I like this rate range!!”

Frank Ceizyk

“Please stop with this sales pitch” buying a home is an investment. Investments can go both up and down.” An 80% increase in home prices from…”

Jason Harris

“Brad…I understand your thoughts and can respect that. I would mention that some folks ultimately view it as a business decision. If taking into consideration…”

Today’s Q&A

“Taxes on a mortgage loan for cash”

“Have rules changed regarding refinancing loan on a home on ag ground?”

“Refinancing current home AND locking in rate for new home. Two Banks… Can I get in trouble????”

<!–

Today’s Forum Discussions

Mary D.

“Loan Scenario View All Post A Scenario Loan State: New York Loan County: Rockland Loan Type: Cash Out Refinance Loan Amount: $316,000 Property Value: …”

walton Titus

“Normal 0 false false false EN-US X-NONE X-NONE /* Style Definitions */ table.MsoNormalTable {mso-style-name:”Table Normal”; mso-tstyle-rowband…”

Norris Noel

“Due to the lack of water people were forced to use rainwater. Mercury from coal burning buildings, bird faeces etc may destroy the rain water. So we cannot…”

–>

[MND NewsWire] – Home Sales Contracts Continue to Rise

Secondary Marketing Managers:
If you are interested in gaining access to the most accurate real-time back-month TBA indications from Thomson Reuters and Tradeweb.  LEARN MORE

Home Sales Contracts Continue to Rise

Posted to: MND NewsWire
Thursday, December 29, 2011 4:04 PM

Forward this email:  Send a copy of this story to someone you know that may want to read it.

The National Association of Realtors® (NAR) announced on Thursday that pending home sales in November reached the highest levels seen in 19 months.  The NAR Pending Sales Index, generally seen as a leading indicator of the level of sales over the next 30 to 90 days, increased 7.3 percent from October figures to an index of 100.1 and is 5.9 percent above November 2010 when the index was 94.5. 

The November reading is the highest since April 2010 when it reached 111.5 near the end of eligibility for the popular homebuyers tax credit which expired the following June 30.  The Pending Home Sales Index is based on signed contracts for home purchases and does not reflect transaction closings.

Lawrence Yun, NAR chief economist, said the gains may result partially from delayed transactions.  “Housing affordability conditions are at a record high and there is a pent-up demand from buyers who’ve been on the sidelines, but contract failures have been running unusually high.  Some of the increase in pending home sales appears to be from buyers recommitting after an initial contract ran into problems, often with the mortgage,” he said.

Pending sales increased in every region.  In the Northeast the index was up 8.1 percent to 77.1 but remained 0.3percent below one year earlier.  Midwest pending contracts increased to 91.6, up 3.3 percent from October and 9.5 percent from November 2010.  The index was 103.8 in the South, up 4.3 percent month-over month and 8.7 percent year over year, and in the West the index surged 14.9 percent to 121.2, a 2.9 percent annual increase.   

Yun said,  “November is doing reasonably well in comparison with the past year.  The sustained rise in contract activity suggests that closed existing-home sales, which are the important final economic impact figures, should continue to improve in the months ahead.”

NAR Said that information on pending home sales is not affected by the rebenchmarking the association did earlier this month on its existing home sales index which resulted in a restating of numbers going back 5 years and a 15 percent downward adjustment to those figures.  The pending sales index uses a different methodology based directly on contract signings, and is adjusted for seasonality.

(READ THE FULL POST)

 

More from MND:

 

If you have trouble viewing this email, you can read the full post at http://www.mortgagenewsdaily.com/12292011_pening_home_sales.asp

You were sent this email because you opted to receive email alerts when a new article was published to this Mortgage News Daily channel. To adjust your email settings:
Manage Your Email

Unsubscribe from all Email Communications

Forward this email:  Send a copy of this story to someone you know that may want to read it.

[MBS Commentary] – MBS RECAP: 12/29/2011

Secondary Marketing Managers:
If you are interested in gaining access to the most accurate real-time back-month TBA indications from Thomson Reuters and Tradeweb.  LEARN MORE

MBS RECAP: 12/29/2011

Posted to: MBS Commentary
Thursday, December 29, 2011 4:19 PM

Forward this email:  Send a copy of this story to someone you know that may want to read it.

MBS Live: MBS RECAP
Open MBS Live Dashboard
FNMA 3.5
102-22 : +0-04
FNMA 4.0
104-29 : +0-05
FNMA 4.5
106-10 : +0-03
FNMA 5.0
107-30 : +0-04
GNMA 3.5
104-09 : +0-04
GNMA 4.0
107-04 : +0-05
GNMA 4.5
108-27 : +0-02
GNMA 5.0
110-21 : +0-04
FHLMC 3.5
102-16 : +0-03
FHLMC 4.0
104-23 : +0-04
FHLMC 4.5
105-27 : +0-03
FHLMC 5.0
107-11 : +0-03
Pricing as of 4:03 PM EST
Afternoon Market Updates
A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBS Live Dashboard.
2:38PM  :  ALERT: MBS Prices at Quarterly Highs. Several Reprices Reported

Several lenders have repriced for the better after Fannie 3.5’s hit their highest levels since the first few days of October. There’s no ground-breaking fundamental data driving a rally either in MBS markets or Treasuries. Volume is almost entirely absent, though not quite as absent as Tuesday.

It’s really really really quiet out there with even the big move on the chart in 10yrs. Given current volumes, it wouldn’t take much to spark such a movement. The following MBS Commentary post has a nifty chart showing a 3 month trend in 10yr yields as well as how futures volume compares over that time. Beyond that, the technical analysis of the longer term trendline in Fannie 3.5’s as well as support from the 80 day moving average might interest some of you, and any fans of the movie “Princess Bride” might also appreciate some of the analysis…

On a final note, as the day winds down and the prospect of an early close looms tomorrow, if you’re seeing certain lenders reprice to relatively aggressive levels, and assuming said lender has been predisposed in the past to release “pipeline control” reprices for the worse, one might also keep that in the back of their minds, although tempered by the realization that less business is likely being done at this particular juncture on the calendar. Trust your instincts… Use the force, etc…

Featured Market Discussion
A recap of the featured comments from the Live Discussion on the MBS Live Dashboard.
Jeff Anderson  :  REPRICE: 3:21 PM – Chase Better
Matthew Graham  :  “what you’re seeing on screens now are the JV players staying warm while varsity is in the locker room talking about the 2nd half”
Andrew Horowitz  :  “l if you were looking to lock in loans i would say the last 3 days gave you a gift”
Matthew Graham  :  “correct hodges”
Matthew Graham  :  “if MBS prices happen to “sell-off,” for lack of an accurate term, it wouldn’t be because of an equity rally”
Matt Hodges  :  “implying that the last 3 days something did?”
Peter Gladkin  :  “wakling into new years weekend in the face of a equities rally…. i am a little nervous about a sell off at this point yes”
Peter Gladkin  :  “that’s a cliff”
Matthew Graham  :  “mini-shockwave from 3pm marks”
John McClellan  :  “there she blows!”
Jason Zimmer  :  REPRICE: 2:25 PM – Sierra Pacific Better
Dan Clifton  :  REPRICE: 2:21 PM – Flagstar Better
Jay Bridges  :  REPRICE: 1:58 PM – Met-Life Better

(READ THE FULL POST)

 

More from MND:

 

If you have trouble viewing this email, you can read the full post at http://www.mortgagenewsdaily.com/mortgage_rates/blog/241426.aspx

You were sent this email because you opted to receive email alerts when a new article was published to this Mortgage News Daily channel. To adjust your email settings:
Manage Your Email

Unsubscribe from all Email Communications

Forward this email:  Send a copy of this story to someone you know that may want to read it.

[Mortgage Rate Watch] – Another Uneventful Day Leaves Mortgage Rates Marginally Improved

Secondary Marketing Managers:
If you are interested in gaining access to the most accurate real-time back-month TBA indications from Thomson Reuters and Tradeweb.  LEARN MORE

Another Uneventful Day Leaves Mortgage Rates Marginally Improved

Posted to: Mortgage Rate Watch
Thursday, December 29, 2011 3:28 PM

Forward this email:  Send a copy of this story to someone you know that may want to read it.

Mortgage Rates took the day off from the faster-paced improvements seen yesterday, and instead improved only in small amounts.  Even then, nothing has been changing as far as the actual Best-Execution rates are concerned as improvements have been limited to borrowing costs.  What that means is that although you’re likely to see the same interest rate atop Good-Faith-Estimates today, the closing costs required by the lender to obtain that rate are, on average, very slightly lower today.

Although it wasn’t to the same extent as yesterday, some lenders released improved rate sheets in the middle of the day as underlying MBS (mortgage-backed-securities) markets generally improved as the day wore on.  Once again, the MBS rally merely took cues from broader bond markets and maintained its positivity due to the extremely low volume that has been pervasive this week.   When volume is as low as it is, fewer people (and fewer dollars) are required to move market levels such as stock indexes, bond yields, or MBS prices.

Today’s BEST-EXECUTION Rates

  • 30YR FIXED –  3.875%
  • FHA/VA -3.75%
  • 15 YEAR FIXED –  3.375%
  • 5 YEAR ARMS –  2.625-3.25% depending on the lender

Lock/Float Considerations

This is basically “it.”  While similar rate sheet offerings could prevail through tomorrow, we’re now in the last 24 hours of 2011.  Many market participants have been absent and the day to day trading that governs mortgage rates may consequently not have been an entirely accurate portrayal of where things would be were the rest of the players back in the game.  That will quickly change next Tuesday, and hopefully it leaves rates right where they are (or better).  There’s really no way to know for sure.  We don’t necessarily think rates are destined to move higher in the short term, but would also point out that they continue to be effectively as low as they’ve ever been, and both technically and fundamentally have had a hard time getting more than .125% lower.

(READ THE FULL POST)

 

More from MND:

 

If you have trouble viewing this email, you can read the full post at http://www.mortgagenewsdaily.com/consumer_rates/241415.aspx

You were sent this email because you opted to receive email alerts when a new article was published to this Mortgage News Daily channel. To adjust your email settings:
Manage Your Email

Unsubscribe from all Email Communications

Forward this email:  Send a copy of this story to someone you know that may want to read it.