PennyMac Mortgage Investment Trust
Latest PennyMac Mortgage Investment Trust News and Updates
Initial jobless claims jump
Initial jobless claims rose to an annualized rate of 360,000 for the week ended May 10th Initial jobless claims are one of the few labor market indicators that are released every week. Unemployment is a profound driver of economic growth, and persistent unemployment has been the Achille’s heel of this recovery. While it seems like […]
The Fed maintains its policy on reinvesting QE assets
The Fed’s decision to reinvest QE assets in the markets affects REITs. It keeps a bid under TBAs, and it supports MBS values in general.
Why the FOMC Statement Is Constructive on the Economy
The FOMC didn’t change its characterization of the economy. The labor markets are improving, economic growth slowed, and household spending moderated.
Chimera posts growth in third quarter profit and interest income
Chimera’s core earnings grew to $116 million compared to $93 million in the year-ago period. Growth was mainly due to an increase in net interest income.
Must-know: Home prices increase 7.4% YoY
The 7.4% year-over-year (or YoY) gain resembles the gains we saw during the bubble years. On a month-over-month basis, the increase was only 1.2%. It was decent. The prices for ex-distressed sales increased 6.8%. Prices are still 11.9% below their peak in April 2006.
April Federal Housing Finance Agency House Price Index rose 7.4%, good for investors
The Federal Housing Finance Agency (FHFA) House Price Index The FHFA House Price Index differs from the other house price indices like Case-Schiller and Radar Logic in that it only looks at houses with mortgages guaranteed by Fannie Mae and Freddie Mac. This means all the home prices are below the conforming threshold, which is $417,000. […]
Why The Fed Continues To Anticipate Lower Unemployment
At the March 2013 meeting, the Fed was forecasting that 2015 unemployment would be 6.7%–7%. Now, the Fed is forecasting that unemployment will be 5.2%–5.3%.
Why home price appreciation has saved MFA Financial
MFA Financial is a REIT that invests in both agency and non-agency mortgage-backed securities MFA Financial (MFA) is a mortgage real estate investment trust (REIT) that invests in both agency (government-guaranteed) and non-agency (non-guaranteed) mortgage-backed securities (MBS). Its portfolio is primarily invested in hybrids, adjustable-rate mortgages (ARM), and 15-year fixed-rate mortgages. It chooses to invest […]
Massive mortgage market transformation: The return of subprime?
The mortgage market is undergoing a massive transformation as the private label mortgage market returns.
Radar Logic futures curve predicts flat real estate prices until September 2014
Radar Logic futures can be used to forecast real estate prices Most people are unaware that there is a futures market for U.S. real estate prices. The Radar Logic futures contract launched about a year ago on the CBOE Futures Exchange. While they are not especially liquid, they do provide an insight into what the market […]
Mortgage applications rebound after a short holiday week
Mortgage applications fall off a cliff on a short week The MBA Applications index rose 11% after falling 13% the week before, which was a holiday-shortened week. Refinances drove the increase, with an 18% jump in the index. Purchase activity also rose, although only slightly. The summer selling season is winding down, and we’re entering […]
Mortgage delinquencies tick up in June: Blip or trend change?
Ninety-day mortgage delinquencies rebound to 6.7% after hitting 6.1% in May Mortgage delinquencies are falling as home prices rise and the foreclosure pipeline is clearing. While 6.7% seems low compared to the peak of 10%, the “normal” level prior to the housing bubble was in the 4%-to-5% range. This also reflects the mortgage modification push […]
Is the secular bond bull market over? A primer on interest rate risk, Part 6
Back to Part 5 Non-agency mortgage backed securities – interest rate risk and credit risk When we think of non-agency paper, we have both interest rate risk and credit risk. The interest rate risk borne by non-agency mortgage backed securities is more or less the same as agency paper. They have the same exact issues […]
FHFA Home Price Index rises in June, good for non-agency REITs
The Federal Housing Finance Agency (FHFA) House Price Index The FHFA House Price Index differs from the other house price indices like Case-Shiller and Radar Logic in that it only looks at houses with mortgages guaranteed by Fannie Mae and Freddie Mac. This means all the home prices are below the conforming threshold, which is $417,000. It […]
Why steeply falling originations mean bad news for non-agency REITs
Mortgage originators have had a difficult time over the past year, as rates have begun rising. The increase in interest rates pretty much stopped the refinance boom in its tracks.
Why initial jobless claims jumped on the government shutdown
Initial jobless claims increased to an annualized rate of 374,000 for the week ended October 4. Unemployment has been the Achilles’ heel of this recovery.
The CoreLogic Index shows home price appreciation is decelerating
The CoreLogic Index is a widely followed index of real estate values. Unlike the other major indices—like Case-Shiller or Radar Logic—CoreLogic separates distressed sales from non-distressed sales.
Leverage and mortgage REITs – Part 2
Leverage and Mortgage REITs – Part 1 How a mortgage REIT typically does it Most mortgage REITs use repurchase agreements to fund their balance sheet. A repurchase agreement (repo) is basically a secured loan. The REIT will pledge the mortgage backed securities they just bought as collateral for a loan. It is actually an agreement […]
MFA Financial portfolio yield continues to drop
MFA Financial is a REIT that invests in both agency and non-agency mortgage backed securities MFA Financial (MFA) is a mortgage Real Estate Investment Trust (REIT) that invests in both agency (government guaranteed) and non-agency (non-guaranteed) mortgage backed securities. Their portfolio is primarily invested in hybrids, adjustable rate mortgages (ARM), and 15 year fixed rate […]
S&P/Case-Shiller Home Price Index rises in March
The Standard and Poor’s/Case-Shiller index of real estate prices increased 10.9% year-over-year in March, hinting that the real estate market bottomed around this time last year. The Case-Shiller index The Case-Shiller index is the most widely quoted index of real estate values. Real estate values are big drivers of consumer confidence and spending, and, therefore, […]
Why MFA Financial benefits from increasing real estate prices
Over the past 12 months, MFA has paid a dividend yield of over 20% when you take into account two special dividends.
Primer on mortgage backed securities, Part 5
Continued from Primer on mortgage backed securities, Part 4. Prepayment risk Prepayment risk and interest rate risk go hand-in-hand. The main difference between a mortgage backed security and a government bond is that with a government bond, you know exactly when you will get your principal and interest payments. If you purchase a 7-year Treasury […]
Primer on mortgage backed securities, Part 1
What are mortgage backed securities? Mortgage backed securities are pools of individual mortgages that have similar characteristics. They allow a relatively illiquid asset (an individual home mortgage) to be converted into a very liquid asset that can be traded with relative ease. They also allow an issuer to divide up the cash flows in order […]
Is the secular bond bull market over? A primer on interest rate risk, Part 4
Back to Part 3 Interest rate risk and mortgage backed securities Mortgage backed securities have different interest rate risk than conventional Treasuries and corporate bonds. This is because of prepayment risk. When interest rates fall, borrowers will typically refinance their mortgages. To an investor, they will get their pro-rate allocation of principal early. They will not get […]
Mortgage applications increase 7% for the week ending May 3
Mortgage applications, as reported by the Mortgage Bankers Association, rose 7% for the week ending May 3rd in spite of a five basis point increase in mortgage rates Mortgage applications are primarily interest-rate driven. Applications typically increase as rates fall because home owners take advantage of the drop in rates to refinance. Conversely, they fall […]
Why mortgage servicing rights imply risks for servicers
Risks of being a servicer Generally, servicing seems like an easy job. Collect the payment, give the government its take, pass the (smaller) payment to the bondholders, and keep the rest. What could go wrong? There’s just one catch. What happens if you miss your mortgage payment? The U.S. government guarantees Ginnie Mae securities. When […]
Fed’s Balance Sheet swells to $3.2 Trillion
The Fed’s balance sheet rose to over $3 trillion in Q1 as quantitative easing goes into overdrive.
Must-know: Home prices hit their highest level since May 2008
The 12% year-over-year gain resembles the gains we saw during the bubble years. Both distressed sales and non-distressed sales rose by similar amounts.
Are lower rates enough to trigger another refinance wave?
The increase in rates has basically put prepayment worries on the back burner for REITs. The lack of a reaction in the refinance index on the back of a drop in rates could mean we’re finally seeing prepayment burnout. This would be good news for REITs.
Mortgage Rates Fall Again As The 10-Year Rallies
The rally in bonds has been an unexpected gift to cap off what was otherwise a dismal year in mortgage banking.
An Old Headache Returns: Increased Prepayment Speeds Up
The Mortgage Bankers Association (or MBA) Refinance Index rose 66% from 1,349 to 2,245 as rates finally fell enough to allow refinances.
Mortgage delinquencies tick up 6.08%
Better economic times are helping lower mortgage delinquencies, but we still have some work to do clearing the foreclosure pipeline.
MBA Refinance Index continues to fall
The MBA Refinance Index is an important index to forecast mortgage activity and prepayments The Mortgage Bankers Association (MBA) Index of Refinance Activity measures application activity, not loans made. The Mortgage Bankers Association samples roughly 75% of all mortgage activity in the U.S., and its indices are key indicators for the real estate finance market […]
Leverage and mortgage REITs – Part 1
The use of leverage is how REITs provide a high yield from low-yielding instruments Mortgage REITs, particularly agency REITs, use leverage to enhance returns. Agency REITs invest solely in government mortgage backed securities – either Fannie Mae, Freddie Mac, or Ginnie Mae. These securities do not have credit risk – in other words, even if […]
Non-farm productivity increases in Q1
Productivity is a measure of output per unit of labor Productivity increases allow wage increases without increasing inflation. The sister index to productivity is unit labor costs, and, unsurprisingly, the Bureau of Labor Statistics releases them together. Non-farm productivity is calculated by dividing an index of output by an index of hours worked. Productivity growth […]
Initial jobless claims fall to 324,000
Initial jobless claims rose to an annualized rate of 324,000 for the week ended April 26th Initial jobless claims are one of the few labor market indicators that are released every week. Unemployment is a profound driver of economic growth, and persistent unemployment has been the Achilles heel of this recovery. While it seems like […]
Case-Shiller Index improves in February
The Standard and Poor’s/Case-Shiller index of real estate prices increased 9.3% year-over-year in February, hinting that the real estate market bottomed around this time last year. The Case-Shiller index The Case-Shiller index is the most widely quoted index of real estate values. Real estate values are big drivers of consumer confidence and spending, and, therefore, […]
Why Do Housing Starts Remain Muted?
Housing starts and building permits came in around 1.2 million—towards the top end of a narrow range over the past year.
Why Are State Foreclosure Laws Important?
There are two basic types of state foreclosure laws—judicial and non-judicial. In non-judicial states, foreclosures are handled through a streamlined process.
How Do Foreclosures Impact Mortgage REITs?
The federal government has taken numerous steps to reduce foreclosures. It started with loan modification programs.
Week in Review: Adjusting to the Brexit Vote
Last week was pretty light in terms of economic data, but markets were concerned with adjusting to the Brexit vote. For all the worries about Brexit overseas, it simply won’t have much of an effect on US corporate earnings.
The FOMC Notes That Economic Growth Has Begun to Decelerate
According to the April FOMC minutes, the staff believes that GDP growth has begun to decelerate. Industrial production and manufacturing output declined in February and March.
Must-know: Understanding non-qualified mortgage loans
Non-QM loans would typically be useful for borrowers with sporadic income, but a large amount of assets. However, lenders will only consider low loan-to-value (or LTV) loans—like 80% maximum, which really is a ceiling. Most lenders are below that.
Mortgage rates rise 10 basis points on strong economic data
The average 30-year fixed-rate mortgage rose 10 basis points, from 4.38% to 4.48%, while the ten-year bond rose 11 basis points.
Initial jobless claims fell slightly, good for non-agency REITs
Initial jobless claims decreased to 339,000 for the week ended November 8. The financial industry is laying people off as the mortgage business dries up.
Why mortgage applications rose despite the government shutdown
Mortgage applications fall slightly The MBA Applications Index rose 0.3% after rising 1.2% the week before. Mortgage applications have dropped off a cliff ever since rates began increasing last spring. Both purchases and refinances drove the increase. The summer selling season is winding down, and we’re entering a slow period that will last through the […]
Recommendation: What the shutdown means for mortgage originators
Mortgage originators are in a tough environment After feasting on the refinance boom of 2012, mortgage originators are finding 2013 to be a much more inhospitable environment. Many banks had added little capacity and were able to make a fine living doing refinance activity, which is a technologically driven business led by price discovery. It’s […]
Week in preview: Expect two big homebuilder earnings reports
Next week is all about the FOMC (Federal Open Market Committee) meeting The FOMC meets on Tuesday and Wednesday, and we should have the announcement on Wednesday afternoon around 2:00 p.m. Taper? By how Much? Which securities? The Fed will also release its forecast of economic activity. The Fed has been consistently over-optimistic on economic growth, and […]
Invesco Mortgage Capital book value per share declines 12%
Invesco Mortgage Capital (IVR) is a mortgage REIT that focuses on agency and non-agency mortgage-backed securities Invesco invests in a wide range of products, from agency residential mortgage-backed securities, to non-agency mortgage-backed paper, to commercial mortgage-backed securities and residential and commercial mortgage loans. Invesco Mortgage Capital is externally managed by Invesco (IVZ). Its portfolio is […]