Good morning and happy hump day! We continue to study the health of the housing market today as we got Mortgage Applications for the week ending 6/18 at 6:00 a.m. central time and New Home Sales for May at 9:00. Mortgage Applications are coming off a strong +4.2% for the prior week. Today we continued to stay positive at +2.1%. The street was looking for a small uptick of +0.2% in New Home Sales after it got hammered -5.9% in April! That didn’t happen, as the May reading got pounded again at -5.9%! To add insult to injury, the April number was revised from -5.9% to -7.8%! Those housing headwinds we’ve been talking about are still blowing!

Bonds today are down marginally as the 10yr T-Note is -2/32 to $101-12, which yields 1.47%. In MBS, 30yr FNMA 2.50% are +5/32 to $103-08, yielding 1.79% and +90 basis points to the 5.1yr treasury curve. That’s it from MBS/loan central. Have a great day!

Cherry Picks

ARMS / FLOATERS

Cost
$105-18
$1.56mm Fannie Mae 5/1 ARM 2.497% #BP6432 7/50 stated final
Average Life
2.9 yr
Yield
0.49%
Speed
15% CPB
Spread
-8/z curve
Coupon
2.497%
MTR
49
Loans
31
Caps
Periodic 2/2/5, Lifetime 7.497%
Floor
1.62%
1 Yr. Libor
+1.62%
WAM
349
Factor
.8277

10 Year Fixed

Cost
$104-06
$10mm+ Fannie Mae 10yr am 2.00% #MA4368 5/31 stated final
Average Life
3.2 yr
Yield
.63%
Speed
394 PSA
Spread
+26/I curve
Coupon
2.00%
# Loans
2,207
Origination
2021
Type
Fannie Major
WAM
117
Factor
.9904

15 Year Fixed

Cost
$103-22
$3mm Fannie Mae Dwarf 2.00% #MA4095 8/35 stated final
Average Life
4.2 yr
Yield
1.06%
Speed
252 PSA
Spread
+45/I curve
Coupon
2.00%
# Loans
17,096
Origination
2020
Type
Fannie Major
WAM
166
Factor
.7572

20 Year Fixed

Cost
$102-12
$1.3mm+ Fannie Mae 20yr am 2.00% #MA4333 5/41 stated final
Average Life
5.9 yr
Yield
1.55%
Speed
204 PSA
Spread
+54/I curve
Coupon
2.00%
# Loans
17,393
Origination
2020/2021
Type
Fannie Major
WAM
237
Factor
.9921

30 Year Fixed

Cost
$106-06
$10mm Fannie Mae 30 yr am 3.50% #MA4296 2/51 stated final
Average Life
4.4 yr
Yield
1.95%
Speed
377 SA
Spread
+129/I curve
Coupon
3.50%
# Loans
91
Origination
2020/2021
Type
Fannie Major
WAM
354
Factor
.9378

Agency CMBS

Cost
$105-04+
$17.0mm FNMA 12/10 DUS #BL6689 2.19% coupon 5/2032 stated final
Average Life
10.0 yr
Yield
1.65% + 10/swaps
Speed
0% CPY
Coupon
2.19%
Call Protection
107mo Yield Maintenance
Tier
2
GEO
OH
DSCR
1.33x
LTV
75.0%
OCC
94.4%
Factor
1.0000

Agency CMO – 3 Year

Cost
$103-30
$5mm Fannie Mae "Busted PAC" 2.50% #FNR 20-20 DC 7/47 stated final
Average Life
3.1 yr
Yield
1.36%
Speed
262 PSA
Spread
+100/I curve
Collateral
New Fannie 30yr 2.50%
Coupon
2.50%
Band
Busted PAC
Avg Life w/ rates +300
6.4 yr
Factor
.6369

Agency CMO – 5 Year

Cost
$106-22
$6.6mm+ Fannie Mae "Pass-Thru" 3.00% #FNR 17-72 B 9/47 stated final
Average Life
4.4 yr
Yield
1.35%
Speed
263 PSA
Spread
+70/I curve
Collateral
Seasoned FNMA 30yr 4.50%
Coupon
3.00%
Band
Pass-Thru
Avg Life w/ rates +300
6.20 yr
Factor
.3873

Agency CMO – Long End

Cost
$92-12
$12mm Freddie Mac "Sequential" 2.00% #5083 ML 3/51 stated final
Average Life
18.9 yr
Yield
2.51%
Speed
176 PSA
Spread
+40/I curve
Collateral
New 30yr Jumbo 2.00%
Coupon
2.00%
Band
Sequential
Avg Life w/ rates +300
18.9 yr
Factor
1.0000

Jim Tait is a registered representative with and offers securities through Hanover Securities, Inc. (Hanover), Member FINRA & SIPC. Although this information has been obtained from sources we believe reliable, we do not guarantee its accuracy, and it may be incomplete or condensed. This is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. Securities that may be shown are subject to availability and changes in price. Past performance is not indicative of future results. Changes in any assumptions may have a material effect on projected results.

 This information from Hanover Securities is for your private use and does not constitute an offer or solicitation with respect to the sale of any security. This information was obtained from sources we believe to be reliable but we do not represent that it is accurate or complete, and it should not be relied on as such. Certain transactions may give rise to substantial risk and are not suitable for all investors. This information was based on current market indicators which may vary over time. We may from time to time buy or sell, or have long or short positions in securities identical or related to those identified herein. 

Although this information has been obtained from sources we believe reliable, we do not guarantee its accuracy, and it may be incomplete or condensed. This is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. Loans and/or Securities which may be shown are subject to availability and changes in price. Past performance is not indicative of future results. Changes in any assumptions may have a material effect on projected results. This information from Banes Capital Group (BCG) and/or Hanover Securities is for your private use, and was obtained from sources we believe to be reliable. However, we do not represent that this information is accurate or complete, and it should not be relied on as such. This information is for institutional investors only, and as such certain transactions may give rise to substantial risk and are not suitable for all investors. This information was based on current market indicators which may vary over time. We may from time to time buy or sell, or have long or short positions in loans or securities identical or related to those identified herein. 

The pricing of loans or any Level II or III asset is inherently an exercise in quantifying uncertain variables. As such, great care should be taken when pricing loans for reporting purposes. The information included herein should never be taken as the sole method, or even a method to be relied on, for the pricing of loans or other Level II or III assets as this is for informational purposes only.