Lately, mortgage rates and bond yields have shown a weak correlation. Treasury yields have fallen over the past month, while mortgage rates have been steady.
There are two basic types of state foreclosure laws—judicial and non-judicial. In non-judicial states, foreclosures are handled through a streamlined process.
Lately, mortgage rates and bond yields have shown a weak correlation. Treasury yields have fallen in the past month, while mortgage rates have been steady.
American Capital Agency declared a dividend of $0.60 per share for the quarter. It didn’t change from $0.60 per share declared during the fourth quarter.
Last week, bond yields fell by 12 basis points as global bonds sold off. Stocks gained on the risk-on trade. Markets still expect the Fed to do nothing next week.
Mortgage rates are the lifeblood of the housing market. The Fed’s plan to help the housing market started when it pushed rates lower to allow people to refinance.
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.
In April, the Case-Shiller Index rose by 1% month-over-month. It’s up by 5.4% YoY. Prices are still about 10% below the peak set in the summer of 2006.
After closing the prior week at 1.7%, bond yields—as tracked by the iShares 20+ Year Treasury Bond ETF (TLT)—rose by 14 basis points to 1.84% last week.
Mortgage rates are the lifeblood of the housing market. The Fed’s plan to help the housing market started when it pushed rates lower to allow people to refinance.
State laws affect the value of mortgage servicing rights. Typically, the rights in states like New York and New Jersey trade at a 25% discount to other states.
Lately, mortgage rates have mainly ignored bond market movements. However, they finally started catching up. Last week, they rose by 5 basis points to 3.67%.
MFA Financial ended up declaring a dividend of $0.20 per share for 4Q15, which works out to a 12.2% current yield. This was flat with what it had been paying for the past couple of years.
After closing out the prior week at 2.05%, bond yields, as tracked by the iShares 20+ Year Treasury Bond ETF (TLT), fell 13 basis points last week to close at 1.92%.
Mortgage rates have largely ignored the moves in bond markets. In the week ended January 22, they were unchanged at 3.7%. The ten-year bond yield rose to 2.05%.
After closing out the prior week at 2.1%, bond yields fell by 8 basis points for the week ended January 8 to close at 2.0%. They fell as global stock markets sold off on China’s weakness.
Though the week ended Friday, January 8, 2016, wasn’t fruitful for many investors, a few REITs provided some relief to investors in the volatile market.
Ten-year bond yields influence everything from mortgage rates to corporate debt. Now, they’re the benchmark for long-term interest rates in the United States.
The seasonally adjusted Case-Shiller Index rose by 0.8% month-over-month and is up by 5.5% year-over-year. Since home prices bottomed out, we’ve had a couple of years of low double-digit returns in prices.
For the week ending November 20, 2015, the iShares US Real Estate ETF and iShares Mortgage Real Estate Capped underperformed the SPDR S&P 500 ETF Trust.
After closing out the prior week at 2.03%, bond yields, as tracked by the iShares 20+ Year Treasury Bond ETF (TLT), rose by 5 basis points for the week ending October 23 to go out at 2.08%.
The latest survey shows that consumers expect home price appreciation to increase by 2.5% over the next 12 months. This is up 20 basis points month-over-month.
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%.
Since the bubble burst, mortgage origination has been almost exclusively government-driven. The US government bears 50% of the credit risk of the entire US mortgage market.
Borrower behavior is heavily influenced by consumer protection laws—particularly at the state level. States that require a judicial review of foreclosure activity tend to have higher delinquency rates.
In general, mortgage delinquencies fell to 5.4% due to home price improvements and clearing foreclosure pipelines. The normal level before the housing bubble was between 4% and 5%.
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.
We have a big week ahead, with a slew of important economic data and earnings from the mortgage REIT sector. The biggest REIT will be Annaly Capital reporting on Wednesday.
The MBA Applications Index fell 7.2% after rising 0.2% the week before. This is the lowest reading for the MBA Mortgage Applications Index since early 2001.
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.
In general, mortgage delinquencies are falling as home prices rise and the foreclosure pipeline clears. While 5.7% seems low compared to the peak of 10%, the “normal” level prior to the housing bubble was in the range of 4%–5%.
MFA Financial (MFA) is a mortgage REIT that invests in both agency and non-agency mortgage-backed securities. Its portfolio is primarily invested in hybrids, adjustable-rate mortgages, and 15-year fixed-rate mortgages.
In the judicial states—particularly New York, New Jersey, and Connecticut—we’re seeing much lower home price appreciation— in fact, there’s very little residential construction at all
It’s important to for investors to understand how real estate prices affect mortgage REITs like Annaly (NLY), American Capital Agency (AGNC), and Redwood Trust (RWT) as well as homebuilders.
The average 30-year fixed-rate mortgage rose 2 basis points, from 4.15% to 4.17%, while the ten-year bond yield rose 11 basis points after some weaker economic data.
The Consumer Financial Protection Bureau promulgated a list of requirements for a mortgage to be considered a qualified mortgage (or QM). On January 1, the new QM rules took effect.
Existing home sales have been lower than usual. Most markets usually bottom on some sort of big volume wash-out, where inventory is dumped from weak hands into strong hands.
Black Knight Financial Services (formerly known as Lender Processing Services) is a vendor to mortgage originators, handling mortgage processing and default management outsourcing.
The 7.6% year-over-year gain was the second highest since mid-2006, and it puts the index back at April 2005 levels. The rate of price appreciation appears to be slowing.
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.
The MBA Applications Index fell 12.8% after holding steady the week before. Mortgage applications have dropped off a cliff ever since rates began increasing last spring.
The current head of FHFA, Ed DeMarco, has steadfastly refused to consider principal mods because he views them as a losing proposition to the taxpayer.
The biggest names in the REIT sector are Annaly (NLY) and American Capital Agency (AGNC). They bear no credit risk, but they do bear a lot of interest rate risk.
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 […]
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 […]
Bonds fell slightly and equities rallied on the shutdown. Why? Beltway insiders who were hoping that the financial markets would get the attention of politicians posturing in Washington were disappointed this morning with the S&P 500 futures up 7 points pre-open and a sanguine outlook from the bond market. Stocks rallied throughout the day, with […]
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 […]
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 […]
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 […]
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. […]
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 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 […]
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 […]
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 […]
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 […]
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 […]
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, […]
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 […]
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 […]
The Home Affordable Modification Program is one of President Obama’s programs to provide relief to distressed home owners The Home Affordable Modification Program lowers the monthly payments for borrowers by reducing the interest rate or extending the term of the loan. So far, the Federal Housing Finance Agency has resisted allowing principal reductions. They will, […]
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 […]
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 […]
