MBS RECAP: Conforming MBS Hold 2-Day Range; Govies Not so Much

By Matthew Graham

Posted To: MBS Commentary

It actually turned out to be a rather boring day for the parts of the bond market with which we normally concern ourselves. Treasuries and conforming MBS both held well-inside yesterday’s range despite giving up some ground early. That’s quite a resilient showing considering the circumstances. Ginnie MBS were less than resilient , however. The culprit was the announcement of a 50bp reduction in annual MI premiums. This goes along way toward putting FHA on more equal footing with Fannie/Freddie’s recently reintroduced 97% LTV programs. It also will simply allow existing FHA borrowers to refinance into lower monthly payments, assuming rates stay near current levels between now and the time the changes take effect. When MBS are priced over PAR (100-00), investors are counting on the…(read more)

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