MBS RECAP: Reprices Reported

After scattered reprices for the better, which have been described as "meager" by many rate watchers, C30 loan pricing is 36.1bps better on average vs. rebate quotes on Friday. These gains might not seem large enough to loan originators but we must remind that the 4.50 coupon is still the hedging vehicle of choice for lock desks, and the 4.50 coupon is only +12/32 today, so pricing improvements are in line with what we should have expected from the major lenders. More importantly, we are happy to report that these gains have been large enough to warrant a move lower in the "Best Execution" 30 year fixed conventional mortgage rate, from 5.125% to 5.00%

(Reuters) - U.S. home prices could fall another 25 percent from current levels, influential economist Robert Shiller said on Tuesday. "My intuition rates the probability of another 15, 20, even 25 percent real home price decline as substantial. That's not a forecast but it's a substantial risk I think," Shiller told reporters on a conference call. U.S. single-family home prices fell for the sixth month in a row in December, bringing them closer to the low seen in 2009, according to the S&P/Case Shiller composite index of 20 metropolitan areas. (Reporting by Corbett B. Daly; Editing by W Simon )

Lenders are reminded that for loans secured by properties located in states that have met their deadlines for transitioning licensing with the NMLS, lenders must deliver loan originator and loan origination company identifiers for loan applications dated on or after the transition deadline. Additionally, the appraiser and supervisory appraiser (if applicable) license or certification numbers are currently required to be delivered.

Sorry for the drama implied by the completely capitalized headline, but you must read this MBS Commentary post.....

Yes, we're reluctant to say "bottoming out," because 3.459 may not be as low as yields go today, but at this point it seems that the more immediate decision is not whether or not yields move lower, but whether or not they hold pivot-based support in the high 3.47's. FNCL 4.5's are still at their highs of 101-13. Reprices for the better have been streaming in and will likely continue as long as we stay near these levels.

Since the 2yr Note Auction, bonds have been exceedingly stable. With that headline data now past, lenders should have less reservations about repricing for the better if they had held off previously. Keep in mind, however, that this is relative to the aggressiveness of the morning rate sheets. So if they priced later in the day, or more aggressively in the first place, reprices are by no means guaranteed. The tightness of the trading range is another factor there. We haven't gained more than 3 ticks since 11:30.

$35 BLN 2-YEAR NOTES AT HIGH YIELD 0.745 PCT, AWARDS 50.16 PCT OF BIDS AT HIGH *** 2-YEAR NOTES BID-TO-COVER RATIO 3.03, NON-COMP BIDS $323.32 MLN *** PRIMARY DEALERS TAKE $21.43 BLN OF 2-YEAR NOTES SALE, INDIRECT $10.86 BLN

Treasury Auction coming up in 15 minutes and 10yr notes are currently at 3.47, their lowest level of the day. FNCL 4.5's have made another new high, now at 101-13+ as stocks make new lows. Reprices for the better have been seen, and will be seen in greater amount if the auction doesn't cause a course reversal.

FNCL 4.5's are up 11 ticks on the day now at 101-12. We've seen a few reprices for the better and more may be on the way if we maintain these levels. 10yr yields haven't made it any lower than 3.479 at 11:20am and are currently at 3.487. Stocks are currently in line with their lowest levels of the day with the S&P at 1325. 84. Auction coming up in about an hour.

For the second time today stocks have failed to mount a recovery rally and are drifting lower. S&Ps are currently -0.96% at 1330. The flight to safety from riskier assets has helped the benchmark 10-year Treasury note break through 3.50% resistance back in the 3.40s for the first time since February 2. Although "rate sheet influential" MBS coupons are lagging into the government bond rally, lenders who published pricing early this morning may reprice for the better.