Reprices for Better Possible Plus a Loan Pricing Comparison

A slow econ calendar combined with a holiday hangover have left MBS flows, as well as those in related markets, few and far between today. In the absence of meaningful investor participation, "rate sheet influential" MBS coupons are taking their directional guidance from the movements of benchmark Treasuries...which are benefiting from a modest decline in stock futures at the moment. 

The August delivery Fannie Mae 4.0 MBS coupon is near week over week highs, currently +0-07 at 101-05. The secondary market current coupon is 1.7 basis points lower at 3.812%. Current coupon yield spreads are wider vs. the 10yr TSY note (+85.3bps) and wider vs. the 10yr IRS (+78.1bps).

Most lenders took down pricing indications when MBS were bid 6-10 ticks lower than current levels. While some desks  may reprice for the better, the FNCL 4.0 coupon needs to hold price appreciations above 101-04 resistance before reprices for the better are seen on a widespread basis.

Below is a snapshot comparison of loan pricing today vs. loan pricing on Friday. On average, rebate is 5.2bps worse and buydowns are 1.6bps more expensive. As explained why in THIS POST, par pricing took the biggest hit this morning. With that in mind there is definitely room for improvement.

A red buydown = cheaper. A red number in the pricing comparison column means rebate was reduced.