spread: Mortgage-Treasury Spread Hits New Lows - Are mortgages safer now?
- 04/05/10 04:51 AM
Mortgage-Treasury Spread Hits New Lows - Are mortgages safer now? In mid-March, a number of articles were published suggesting that the end of the Federal Reserve's Mortgage Backed Security purchase program might drive mortgage rates somewhat higher, fairly quickly. The Fed had telegraphed this upcoming action very loudly and very clearly since 2009. The program has had substantial effects on mortgage rates over the past 16 months. It immediately lowered mortgage rates by 1/2% or more, and, over its course, brought 30-year fixed rates to their lowest point ever, at 4.71% in December of 2009. It also had a profound effect … (0 comments)
spread: Mortgage-Backed Securities Losing their Stigma - What we can learn from the current Mortgage - Treasury Spread
- 06/15/09 06:13 AM
Is there a light at the end of the tunnel? Investors may be suggesting so with the recent surge in the Dow Jones Industrial Average from its March low below 7000 to a recent peak over 8700. Still, some doubt should exist considering the recent economic data hasn't so much indicated the United States economy is getting better, rather that the economy is worsening at a slower pace. Still there is one area, very close to the epicenter of the economy's troubles, that suggests recent changes are achieving their desired results. In the 18 months leading up to December, 2008, the … (18 comments)
spread: Mortgage - Treasury Spread Closes as Homebuyer Incentives Suggest Home Prices May Stabilize
- 03/12/09 09:03 AM
February was a significant month for the mortgage and real estate markets, as a massive bailout package was signed into law, and further talk of foreclosure prevention efforts at the federal level reassured mortgage investors of the safety of their investments. An $8000 tax credit for first-time homebuyers sparked hope for increased home sales in 2009, both for starter homes and condominiums, as well as for so called "move-up" homes needed by those current homeowners able to sell into the current market and purchase significantly discounted replacement homes. Entering March, the Mortgage - Treasury spread reached its lowest point since June, … (1 comments)
spread: Mortgage - Treasury Spread closes sharply in January - is Fed buying bringing stability?
- 02/12/09 02:19 AM
In a month which saw the lowest 30-year fixed rates on record, it isn't surprising that the massive groundswell of refinancing we experienced happened. Its consequences could also be seen as quite predictable: lenders, fresh from laying off thousands of employees in 2008, saw their operations grind to a halt as they received an onslaught of mortgage applications. The reprecussions to market interest rates were rather more cryptic, though. By the end of January, the Mortgage-Treasury Spread had closed to its tightest range since September, 2008, closing the month at 2.28%. The 10-week moving average stayed relatively level at 2.78%, bouyed … (4 comments)
spread: Mortgage - Treasury Spread Remains Near Peak for December 2008; Fed Action Awaited
- 01/02/09 06:53 AM
The Mortgage-Treasury Spread remained near its highest ever level in December, as investors retreaed into the safest available investments to close 2008. Treasury instruments of all maturities saw one of the biggest demand spikes in their history, a sign that risk tolerance was negligible this month. Throughout the month of December, the spread remained largely unchanged from its December 4th level, closing the year at 2.86%. This is down slightly from the December 4th spread at 2.96% The historic low treasury yields reached in December are instrumental to the high spread, as mortgage rates dropped through the month to historically low … (0 comments)
spread: Fed Intervention Fails to Close Mortgage Treasury Spread
- 12/05/08 02:47 AM
In spite of an unprecedented move by the Federal Reserve on November 25th to purchase $600 billion in mortgage-related assets, the spread between mortgage and treasury rates remained at its highest level on record for the week ending December 4th, closing at 2.96%. Investors sought the safety of treasury securities in droves, increasing their prices, and depressing the yield of the 10-year treasury note to its lowest close ever at 2.57% this Thursday. In spite of rampant speculation that the Fed may be prepard to act again, mortgage securities found few buyers. Mortgage rates averaged 5.53%, according to Freddie Mac. The … (6 comments)
spread: After brief respite, Mortgage – Treasury Spread reaches new peak
- 08/25/08 02:09 PM
The 2nd quarter of 2008 began on a positive note for mortgage borrowers, as a relative lack of news caused the Mortgage - Treasury spread to narrow from its March 13th peak at 2.60% to a low of 2.03% May 30th. The Mortgage Treasury spread is an indicator of relative risk between commonly quoted long-term securities, 30-year fixed-rate mortgages as quoted by Freddie Mac, and 10-year treasury notes. (30-year treasury bonds are not used because 30-year bonds have not been continuously available in recent years). Recent news has been less favorable to the spread, however, as the failure of IndyMac Bank, … (4 comments)
spread: Worries at Fannie, Freddie, push Mortgage - Treasury rate spread close to 52-week high
- 07/11/08 02:06 AM
Fannie Mae and Freddie Mac have been struggling with the fallout of the mortgage and foreclosure crisis for some time now. This week alone, there have been several front-page articles in the Wall Street Journal. In pre-market trading this morning, stocks of the two companies are in free-fall, suggesting possible losses as high as 50% today. Recent troubles haven't helped the mortgage bonds of these companies either, which have lost significant value. Remember that bond prices, or value, move inversely to yield, or interest rate, and you will see that in a vacuum, mortgage rates should be rising. Look at recent … (4 comments)
spread: Mortgage / Treasury Spread Widens, On Average
- 04/21/08 07:48 AM
Mortgage rates moved up sharply as last week drew to a close, propelled by a string of positive news out of Wall Street. Several major banks reported colossal losses, yet, because these losses were less than the even more colossal losses that had been expected, the stock market reacted by increasing over 4% on the week, taking wind out of the sails of bonds. Remember that when bonds fall, yields, or rates, increase, and on the week we saw between .25% and .375% increase in rates on most mortgages. We've seen a few months now of a higher-than-normal spread between 30-year … (0 comments)
spread: Tulips & Mortgages: Centuries apart, and yet eerily similar
- 04/19/08 03:12 PM
From time to time, an asset, or a class of assets, will become so popular among investors that its value will grow to exceed the inherent value of the asset. This event is referred to as a financial bubble, as it is perceived that values become over-inflated, and must eventually deflate. Historically, this has happened dozens of times to a greater or lesser extent, with the best remembered occurrence being the Internet Bubble of the late 1990's. The first recorded bubble occurred in the tulip trade in Holland in the early 17th century. An affliction struck a very small proportion of … (2 comments)
spread: Could Rates Be Ready to Fall Again? Treasury / Mortgage Spread Hits Widest Point
- 02/29/08 01:52 AM
The spread between 30-year fixed mortgage rates and 10-year treasury yields hit its highest point in over a year in the week of February 25th, at 2.52%. Mortgage rates averaged 6.24% while treasuries closed Thursday at 3.72%. I have been tracking the spread between 10-year treasury yields and 30-year fixed mortgages since January, 2007. In that time, I have seen this spread, or difference, move from an average of 1.5% in early 2007, before the subprime mortgage problems led to an overall reevaluation of credit quality, to an average substantially over 2%. At this time, the 10-week moving average stands at 2.07%, meaning that, … (9 comments)
spread: Mortgage Rates Leave Treasuries in the Dust
- 11/23/07 06:36 AM
I get an email every morning from a wholesale lender I've never met or closed a loan with, telling me about his take on the market. Specifically, today's email stated that treasury notes had slipped on investors renewed interest in a potentially rising stock market. That's all very well and good, but I've lately decreased my focus on treasuries, specifically the 10-year treasury in my mortgage rate forecasts. Lately, movements in treasury rates have had very little to do with movements in mortgage rates. I believe this is because investors have devalued mortgage securities, thereby raising their required rate of return, as … (0 comments)
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Mortgage-Treasury Spread Hits New Lows - Are mortgages safer now?;)
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