fxfox Posted February 23, 2023 Report Share Posted February 23, 2023 Go bears! Link to comment Share on other sites More sharing options...
sandy beach Posted February 23, 2023 Report Share Posted February 23, 2023 1 hour ago, DrStool said: Are you saying that they are lending at less than their cost of funds? That's suicide. "Normally the note rate on an MBS is a point below the mortgage loan coupon that the consumer pays. The difference pays for servicing, other fees and maybe a small profit for the lender to recoup some of the expenses incurred making the loan. In today’s market, however, lenders are setting coupon’s below 6% on those prime, 20% down loans, and then selling these mortgage notes into a 5.5% MBS for delivery in the too-be-announced (TBA) market next month." "Many smaller lenders who do not have access to term financing must also sell the mortgage servicing right (MSR) to recoup some of their cash losses. As you can see in the snapshot below from the Bloomberg, a 5.5% TBA for March delivery is trading near par. During COVID, the on-the-run MBS was trading at 103-104. So when you as a lender sell that ~ 5.875% loan into a TBA 5.5%, you mostly lose money. Instead of writing loans in the high 5s, lenders should be writing loans with 7% coupons." https://www.theinstitutionalriskanal cyst.com/post/will-we-see-double-digit-residential-mortgage-rates-again Link to comment Share on other sites More sharing options...
DrStool Posted February 23, 2023 Author Report Share Posted February 23, 2023 1 hour ago, fxfox said: Bears gotta smash it down in last 15 mins of trading, otherwise reversal day Sigh Link to comment Share on other sites More sharing options...
DrStool Posted February 23, 2023 Author Report Share Posted February 23, 2023 36 minutes ago, sandy beach said: "Normally the note rate on an MBS is a point below the mortgage loan coupon that the consumer pays. The difference pays for servicing, other fees and maybe a small profit for the lender to recoup some of the expenses incurred making the loan. In today’s market, however, lenders are setting coupon’s below 6% on those prime, 20% down loans, and then selling these mortgage notes into a 5.5% MBS for delivery in the too-be-announced (TBA) market next month." "Many smaller lenders who do not have access to term financing must also sell the mortgage servicing right (MSR) to recoup some of their cash losses. As you can see in the snapshot below from the Bloomberg, a 5.5% TBA for March delivery is trading near par. During COVID, the on-the-run MBS was trading at 103-104. So when you as a lender sell that ~ 5.875% loan into a TBA 5.5%, you mostly lose money. Instead of writing loans in the high 5s, lenders should be writing loans with 7% coupons." https://www.theinstitutionalriskanal cyst.com/post/will-we-see-double-digit-residential-mortgage-rates-again Mortgage Bankers are like the PharMor guys. Sell for a loss but make it up in volume. Link to comment Share on other sites More sharing options...
fxfox Posted February 23, 2023 Report Share Posted February 23, 2023 😂 Link to comment Share on other sites More sharing options...
sandy beach Posted February 23, 2023 Report Share Posted February 23, 2023 How homebuilders are luring buyers back "Pulte has offered 30-year fixed rates as low as 4.25% in recent weeks" https://www.axios.com/2023/02/23/homebuilders-mortgage-rates-horton-lennar-pulte Link to comment Share on other sites More sharing options...
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