Posted on 06/01/2023 5:38:31 AM PDT by Kaiser8408a
A Biden Saturday Night!
Worsening conditions in the US mortgage-backed securities market are doing little to ease fears over financial contagion as a recession looms.
MBS current-coupon yield spreads over Treasuries are near the highest level since 2008 subprime crisis, as economic and political concerns weigh on performance, Erica Adelberg, a Bloomberg Intelligence strategist, wrote in a BI Chart Book. Mortgage-related exchange traded funds are seeing outflows, even as bond funds as a whole enjoy inflows. Applications for loans are near 25-year lows as the housing market languishes.
Use the GP tool for charting and run BI to search for research, data and chart books.
The top panel shows nominal current-coupon yield spreads are back near decade highs, surpassing those seen in the fourth quarter and reaching peak levels from the pandemic panic in March 2020. The bottom panel shows option-adjusted spreads are also wide, trading near two standard deviations of the average level, though slightly more in line than nominals, Adelberg wrote.
Primary mortgage rates are approaching historic highs versus Treasuries too.
Both the secondary mortgage spread to Treasuries (white) and the primary mortgage spread to secondaries (blue) have blown wider. That has increased the total spread between 30-year-fixed consumer mortgage rates and 10-year Treasuries (pink) to near financial-crisis levels.
Elevated spreads could make it harder for borrowers to find rate relief, even if Treasuries rally and secondary mortgage spreads tighten, Adelberg wrote.
Mortgage ETFs saw marginal outflows while bond funds as a whole continued to see inflows. To monitor ETF flows:
MBS spreads may remain under pressure until the economic and inflation outlooks become more optimistic, Adelberg wrote on May 31.
(Excerpt) Read more at confoundedinterest.net ...
“Jobless Claims Data Hovers Near 18-Month High, Ignores Soaring Layoffs”
A worker wanting 8% annual inflation increases should expect to have to pay at least 8% on a mortgage.
LOL. You GOP management types crack me up. How dare uppity US workers wantn to keep up with inflation!!!!
Every house sold is affordable to the person(s) who bought it.
And houses are selling at a brisk pace.
How dare people lending out money want to keep up with inflation!!!!
LOL. You complete slept through 2005- 2008.
They are now doing 1% down loans and 40 year term mortgages. With prices starting to fall a relatively small move and people are upside down on their home.
Increasing the debt from $31 trillion by about $4 trillion in two years is about a 6% annual increase.
All that additional money is going to cause prices (and interest rates) to pretty much match that 6%.
Those can afford to pay higher interest rates are getting a good deal still, but other people who can’t afford to pay higher monthly PITIs are going to remain in rental housing longer (and will have to work correspondingly longer until they are able to retire).
The 149 Republicans and 165 Democrats who voted for the Biden/McCarthy deal think borrowed money is just about free, but it is not (and millions will further accumulate cancelled rent checks as proof).
“The rival programs piggyback off of Fannie Mae’s HomeReady mortgages and Freddie Mac’s Home Possible loans....”
https://www.bankrate.com/mortgages/1-percent-down-mortgage/
“...history...repeat.”
“people are upside down on their home”
There will be a $10,000/$20,000 (or more) vote-buying initiative to fix that.
Which has nothing to do with rising wages.
“MBS current-coupon yield spreads over Treasuries are near the highest level since 2008 subprime crisis”
Perhaps that is substantially based on mortgagor credit quality decreases and house price increases.
“inflation!!!!”
“Which has nothing to do with rising wages.”
I take it that you are not in the market for a shovel.
Biden & Yellen .
Obama, Biden & Yellen. Humm, same people ,same results!
Get stuffed, troll.
Try 12%-25% inflation and 2%-3% COLAs.
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