Long-term 30-year yields have risen to 1.983%, the 10-year is currently yielding 1.182%, and the Fannie Mae 30-year current-coupon spread to the 5/10-year blend tightened to +65. The spread from the current coupon to Treasuries is the lowest in more than 19 months while yields on Treasuries closed at their highest in more than 10 months.
According to data published by Freddie Mac, U.S. 30-year home mortgage rates fell to 2.73% from 2.79%. The average 15-year rate fell to 2.21%, up from 2.21% a week earlier. Refinance applications increased 11.4% for the week ended Jan. 29, according to the Mortgage Bankers Association, following the previous week’s 5.0% drop. The purchase index increased 0.1%. The conventional refinance sub-index rose 12.3% while the government sub-index was up 8.3%. VA refinancing applications increased 8.1% while FHA rose 9.3%.
UMBS 30-year coupons outperformed their hedges last week, with the 3% coupon seeing the worst performance in a 1 tick drop. According to Bloomberg data, the top 3 fastest paying majors were all Fannie Mae 3% coupons, while in the latest speed report the 3% coupon overall dropped less (down 8% vs. down 12%). The 3% coupon has a WAC of 3.76%, leaving room for strong refi incentive.
- Tuesday: Class A Notification
- Wednesday: CPI, MBA mortgage applications
- Friday: Class B Notification