MBS RECAP: Weaker Into Afternoon, But Close To Friday's Levels
By:
Matthew Graham
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MBS Live: MBS Afternoon Market Summary
After losing as much ground as MBS and Treasuries lost on Friday, the breadth of expectations for today's trading widened considerably. The biggest risk was/is that last Wednesday would prove to be a longer term top for MBS prices and a major valley for Treasury yields. Instead, we've seen prices continue splashing around in the same ranges that persisted after going over the waterfall on Friday. Indeed with an empty economic calendar and two major players missing from the overnight session (UK and Japan), this 'uneventful' version of reality was possible. Not only has it played out, but Fannie 3.0s in particular, entered the day smack dab on Friday's closing levels and now look to be heading out the door very close to the same. Treasuries weren't quite as even-keeled, but were steady enough that MBS were able to draw some reassurance that we hadn't flipped a switch into 'full-scale sell-off' mode. The calendar continues to be be subdued though tomorrow brings the start of the Treasury Auction cycle with 3yr Notes followed by Consumer Credit in the late afternoon.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
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Afternoon Reprice Alerts and Updates
Below is a recap of instant Reprice Alerts and updates issued via email and text alert to MBS Live subscribers this afternoon.
2:29PM :
Fed Loan Officer Survey: Mortgage Highlights
"Overall, only small numbers of domestic respondents reported changes in either standards or demand for any type of residential real estate lending during the previous three months, with the exception of a significant net fraction of banks that indicated that the demand for prime mortgages had picked up. A few domestic banks reported having eased their standards on prime residential mortgages, and respondents’ lending standards for nontraditional mortgages were little changed."
"The April survey contained a set of special questions about domestic banks’ RRE lending policies. One such question asked banks how much more or less likely it currently is, compared with a year ago, that their bank would approve an application for a GSE-eligible, 30-year fixed-rate home-purchase loan from a borrower with a FICO score (or equivalent) of 620, 680, or 720 and a down payment of 10 or 20 percent (for a total of six categories of borrowers). Modest to moderate net fractions of banks indicated that they were currently less likely to approve such loan applications with a FICO score of 620, depending on the down payment, though most of those were smaller banks. "
" Roughly three-fourths of respondents viewed either the outlook for house prices or economic activity as at least somewhat important factors currently restraining their bank’s RRE [residential real estate] lending. Three-fourths of banks also cited the risk of putback of delinquent mortgages by the GSEs as an important factor restraining their current ability or willingness to approve home-purchase loans, and in response to the second question, a large fraction of banks reported an increase in the importance of this factor over the past year. "
"[R]espondents anticipate reducing their holdings of private-label MBS, while banks expected holdings of agency MBS to remain about unchanged. A moderate net fraction of banks reportedly expect to increase holdings of RRE loans. Overall, a moderate net fraction of banks expect to increase holdings of RRE assets."
"The April survey contained a set of special questions about domestic banks’ RRE lending policies. One such question asked banks how much more or less likely it currently is, compared with a year ago, that their bank would approve an application for a GSE-eligible, 30-year fixed-rate home-purchase loan from a borrower with a FICO score (or equivalent) of 620, 680, or 720 and a down payment of 10 or 20 percent (for a total of six categories of borrowers). Modest to moderate net fractions of banks indicated that they were currently less likely to approve such loan applications with a FICO score of 620, depending on the down payment, though most of those were smaller banks. "
" Roughly three-fourths of respondents viewed either the outlook for house prices or economic activity as at least somewhat important factors currently restraining their bank’s RRE [residential real estate] lending. Three-fourths of banks also cited the risk of putback of delinquent mortgages by the GSEs as an important factor restraining their current ability or willingness to approve home-purchase loans, and in response to the second question, a large fraction of banks reported an increase in the importance of this factor over the past year. "
"[R]espondents anticipate reducing their holdings of private-label MBS, while banks expected holdings of agency MBS to remain about unchanged. A moderate net fraction of banks reportedly expect to increase holdings of RRE loans. Overall, a moderate net fraction of banks expect to increase holdings of RRE assets."
12:46PM :
ALERT ISSUED:
MBS Hit New Lows. Negative Reprice Risk Increasing
Things have gotten slippery for MBS and Treasuries into the noon hour with Fannie 3.0's falling to 103-30 currently. Not only is this 4 ticks weaker on the day, but it's at least 4 ticks (or .125 points) from most lenders' rate sheet print times. Combined with the negative shape of the 2-day trend, this is enough for some of the 'early crowd' lenders to be considering negative reprices.
Live Chat Featured Comments
A recap of the featured comments from the MBS Live Dashboard's Live Chat feature, utilized by hundreds of industry professionals each day.
Scott Valins : "REPRICE: 3:17 PM - Interbank Worse"
Steve Chizmadia : "You can do it if they have lates with the right investors"
Steve Chizmadia : "had to sell "extenuating circumstances" but they had 10 90 day lates leading up to the short sale a few years ago"
Steve Chizmadia : "I just closed one with the date of contract to purchase just outside of 2 years of a short sale on a conventional deal"
catherinecoy : "MortgageMan007, the seasoning for short sale is two years for FHA if there were no mortgage lates prior to the short sale."
MortgageMan007 : "haven't run across this lately, client had a short sale 2 years ago, looking to buy now, was told he could put 20% down and buy now? "
Tom Schwab : "REPRICE: 2:21 PM - Flagstar Worse"
Steve Chizmadia : "from completion of foreclosure or date of discharge"
Steve Chizmadia : "3 years"
Dirk Postupack : "on FHA what is the time frames on foreclosures / chapter 7 for a purchase"
Scott Valins : "REPRICE: 2:15 PM - Cole Taylor Worse"
Matthew Graham : "RTRS- FED: BANKS' WILLINGNESS TO EXTEND MORTGAGE FINANCE TO BORROWERS WITH 680-720 FICO SCORES UNCHANGED FROM YEAR AGO"
Matthew Graham : "RTRS- FED SAYS RESULTS FOR LENDING TO HOUSEHOLDS WERE MORE MIXED, ALTHOUGH DEMAND FOR PRIME MORTGAGES CONTINUED TO INCREASE "
Matthew Graham : "RTRS- FED SAYS U.S. BANKS REPORT EASING LENDING STANDARDS, STRONGER LOAN DEMAND OVER LAST 3 MONTHS"
Andy Pada : "MG, David Stevens just shared the MND article re: his remarks."
Bryan LaFlamme : "REPRICE: 1:38 PM - 360 Mortgage Worse"
Adam Dahill : "anyone have John Forlines phone number? I'd like to ask him how he expects people to get mortgages in NYC when the Mtg Tax is 1.925% of the loan amount over 500k. And the mansion tax is 1% of the purchase price"
Andy Pada : "so when do the g-fees get introduced?"
Christopher Stevens : "Had an interesting talk with head of BE pricing at Wells today. He feels that 30YR CONV will remain in the 3.500-3.750% range through mid-summer. They are predicting rates north of 3.750% by end of July. He stated that increased G-fees will make it difficult for rates to get much lower than 3.500% regardless of what market does."
Michael Gannon : "I have seen conflicting but its just not feasible in NY with the mtg tax and most of the balance of the country on FHA loans "
Michael Gannon : "there is no way mortgage tax or upfront MI can be included in that"
Andy Pada : "I bet this will be a topic of discussion at the secondary today."
Andy Pada : "how about discount points/buydowns? any clarity there?"
Andrew Horowitz : "They'll let you know january 10th"
Matt Hodges : "still to be determined "
Andy Pada : "has it been determined what constitutes 3% of points and fees? premium?"
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