Trump Trade Reverses

2018-01-02T18:42:32+00:00 March 28th, 2017|Categories: Uncategorized|Tags: , , , , , |

Since the election, stocks have performed very well, while bonds yields have risen. This was due to expected policy changes under the Trump administration which would boost economic growth. Stronger growth is good for the economy and for stocks, but it raises the outlook for future inflation, which is negative for mortgage rates. Over the past week, President Trump encountered resistance to a health care bill. This increased investor concerns about the ease with which Trump will be able to deliver his pro-growth policy changes in areas such as tax cuts, deregulation, and infrastructure spending. As investors questioned whether the policies might be smaller in scale or might take longer to implement, some of the "Trump Trade" reversed this week, which was good for mortgage rates.

Special Update: Favorable Conditions for Mortgage Rates

2018-01-02T18:47:54+00:00 March 23rd, 2015|Categories: BlogTalkRadio Podcasts|Tags: , , , , , , , , , |

A stronger than expected Employment report on March 6 pushed mortgage rates up to the highest level of 2015. Since then, however, nearly all of the news, both globally and in the US, has been favorable for mortgage rates. In Europe, the European Central Bank (ECB) began its sovereign bond purchase program on March 9. The added demand from the ECB has helped push bond yields lower around the world. In addition, Greek and eurozone officials have made little progress in agreeing to terms for the Greek aid package. This caused investors to shift to safer assets, including US mortgage-backed securities. In the US, the major economic data released since the Employment report has been weaker than expected. Retail Sales, Industrial Production, and Housing Starts all have fallen well short of the consensus. Since slower growth reduces expectations for future inflation, this economic data has been good for mortgage rates. Finally, the largest improvement in mortgage rates took place on Wednesday after the release of the Fed statement. Fed officials downgraded their outlook for the economy and inflation, causing investors to push back their expectations for the timing of federal funds rate hikes.  

Special Update: Fed Statement Little Changed

2017-12-20T17:34:12+00:00 July 31st, 2013|Categories: Special Update|Tags: , , , , , , , |

There was very little change in today's Fed statement from the prior statement released on June 19. Investors viewed this as good news for MBS, since the most likely potential changes would have been negative for MBS. For example, some investors thought that the Fed would provide more concrete guidance on the timing to begin to taper its bond purchases. Instead, by avoiding specifics, Fed officials left the timing more open-ended. A decline in the quantity of Fed bond purchases will be negative for MBS.  The primary change to the statement was the Fed's description of the economy. The statement said that the economy is growing at a "modest" pace, while the last statement said that the pace of economic growth was "moderate". The statement noted that Fed officials expect inflation to rise moderately over the medium term, but that there is a risk that it will decline to undesirable levels. The consensus view is still that the Fed will begin to taper its bond purchases in September, unless economic growth weakens significantly. Friday's Employment report will be one of the major upcoming data points which will influence future Fed policy.

Special Update: G-Fee Increases – Update 12.29.11

2017-12-20T17:34:14+00:00 December 29th, 2011|Categories: BlogTalkRadio Podcasts, Special Update|Tags: , , , , , , , , , , |

                                                                                                                                                                                               FHFA has answered a couple of the questions we raised on Tuesday regarding the Congressionally mandated increase in Fannie Mae and Freddie Mac guarantee fees (G-fees).  Effective April 1st all G-fees charged by Fannie and Freddie will be increased by 10 basis points.   In addition, FHFA said that during the first part of 2012 they will determine whether the new law will require additional increases in the G-fees.   Since G-fees are paid from the interest on a loan, this increase will cause mortgage rates on loans going into Fannie and Freddie mortgage-backed securities after April 1st to rise by a similar amount.

Special Update: G-Fee Increases 12.28.11

2017-12-20T17:34:14+00:00 December 28th, 2011|Categories: Special Update|Tags: , , , , , , , , , , , |

On Friday, President Obama signed into law the Temporary Payroll Tax Cut Continuation Act. This Act uses increased guarantee fees on new mortgages to pay for reduced payroll taxes. The amount of the g-fee increases will be included in future mortgage rates. Below are general provisions pertaining to increasing the Guarantee Fees for Fannie, Freddie, and FHA. Several elements in the bill are not quite clear and may take weeks or months to determine. The primary questions are:  1. How much will the Fannie and Freddie g-fee rise? The Act calls for a minimum increase of 10 basis points, but the amount of the increase is to be determined by FHFA and is supposed to a)"cover the risk of loss associated with the guarantee", and b) be based on "the cost of capital allocated to similar assets held by other fully private regulated financial institutions". This definition could result in a wide range of fee increases. The early expectation from insiders is that the increase will be 10 basis points. 2. When will the increase become effective? The Act says the increase is to be applied to guarantees issued after enactment of this section. The date this provision is to [...]

Blog Talk Radio Show October 3, 2011: Dire Predictions

2017-12-20T17:34:14+00:00 October 6th, 2011|Categories: BlogTalkRadio Podcasts|Tags: , , , , , , , , , |

Toni Moss, the President of AmeriCatalyst and EuroCatalyst, joined the Lykken on Lending radio show on Monday to provide her thoughts on the world economy.  Toni’s experience and knowledge makes her opinions worth listening to.  She has access to the finance ministers of most of the European nations, as well as in the US.  Toni’s assessment of the world economy is that major changes are ahead.  And they are not positive changes.  She believes that a global economic collapse is underway and default by Greece on its sovereign debt, which she believes is imminent, will be the first of many dominoes to fall.   Money and the power that goes with it is leaving the western nations, including the US,  and moving east.  She believes globalization has neutralized the effect sovereign entities have over monetary policy and that we are headed to the end of the fiat currency system (money backed by governments, not a physical commodity).  She expects all this to be well underway in 2012.  Wow! Toni paints a dire picture of our economic future.  Her opinions are certainly due thoughtful consideration.  I am not sure I know what you can do with the information.  If what she expects [...]

Understanding the Fed Announcement

2017-12-20T17:34:14+00:00 September 23rd, 2011|Categories: In The News|Tags: , , , , , , |

Since the Fed released its statement yesterday afternoon, MBS markets have staged a very strong rally for several reasons. First, quite simply, the Fed confirmed that there are "significant downside risks" to the US economic outlook. Slower economic growth reduces inflationary pressures, which is favorable for MBS markets. Second, the Fed announced the widely expected Operation Twist program. This program will extend the average maturity of the Fed's portfolio by purchasing $400 billion of longer-term Treasury securities and selling an equal amount of shorter-term Treasuries. The increased demand for longer-term assets is intended to help push longer-term rates lower. The third major element from the statement helping MBS markets was a surprise to most investors. The Fed will begin to reinvest MBS principal payments (from prepayments and maturing securities) in additional agency MBS. Until now, the Fed has been reinvesting the MBS principal payments in Treasury securities. With roughly $885 billion in MBS holdings in the Fed's portfolio, these principal payments are expected to create a significant source of additional demand for MBS, and this measure is specifically targeted at keeping mortgage rates at low levels. As usual, the impact of the economic news was priced in very quickly, similar [...]

Blog Talk Radio Show August 29, 2011: Distress Servicing Conference

2017-12-20T17:34:15+00:00 August 30th, 2011|Categories: BlogTalkRadio Podcasts|Tags: , , , , , , , , , , , |

This week’s Lykken on Lending show discussed developments in the servicing of delinquent/distressed mortgages.    Ed Delgado, CEO of the Five Star Institute was the guest speaker.  The Five Star Institute holds conferences around the country specializing in Servicing Distress Loans.  Their next conference will be in Dallas from September 11th through the 13th .  With so many delinquent loans currently outstanding and so many loans in foreclosure or already ready foreclosed, sharing servicer successes and failures in this area is very important.  This conference will be a great place to do this.  More than 3000 are expected to attend. Click PLAY to listen to the podcast of this week’s BlogTalkRadio/Lykken on Lending with Dave Lykken and MBSQuoteline's Joe Farr: Listen to internet radio with David Lykken on Blog Talk Radio MBSQuoteline supplies the essential market information necessary for effective decision making by Originators when assisting borrowers during the loan origination process, and for secondary marketing departments while managing pipelines. For additional information or to sign up for a free 2-week trial subscription, visit or call (800) 627-1107. Tune in every Monday at 1:00pm(et)  for up-to-the-minute information on interest rates, loan programs and "hot" industry news related to the mortgage industry. Dial: [...]

Press Release: Secondary Interactive Offers MBSQuoteline Information

2017-12-20T17:34:15+00:00 August 16th, 2011|Categories: In The News|Tags: , , , , , , , |

Company brings additional resources in a complex market DENVER, Aug. 16, 2011 – Secondary Interactive (SI), the award-winning provider of mortgage pipeline management, best execution and loan allocation technology & services, announced that its customers can now access MBSQuoteline’s live TBA mortgage-backed security prices and mortgage market news and analysis, at a discounted price. While the SI system incorporates real-time market data from Tradeweb and Bloomberg into its analytics, executive management recognized that many of its customers wanted current securities pricing but, could not justify the expense of other providers. This partnership satisfies the demand for a “skinny version that gives SI customers convenient, and portable, access to real-time market quotes. Secondary Interactive customers will now have the entire suite of MBSQuoteline products and services available at a discounted rate, if they choose to supplement SI’s existing offerings. Don Brown, co-founder of Secondary Interactive said, “MBSQuoteline enables SI customers to stay abreast of changing market conditions at an affordable price.  They get a broad range of services including real-time MBS prices, alert e-mails or texts, expanded market coverage, ARM indexes, commentary and analytics, as well as mobile access to the service. We are always looking to give our customers as many [...]

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