Thursday, December 18, 2008

Yesterday's MBS Action

A chart of yesterday's pricing action in the FNMA 5.0 coupon, from the Mortgage News Daily's MBS blog

Wednesday's movement is from the middle of the chart on (1st half is Tuesday). Traders were on a shopping spree in the morning and rates improved to the best levels we've seen since 2003 (just under 5%). But within 15 minutes the buyers remorse kicked in and prices fell precipitously for the next 2 hours and continued to trade down for the remainder of the day. Our sub-5% rates had come and gone in a blink of an eye.

Some material to chew on:

Paulson Denies Rumored 4.5% Mortgage Rate Plan (Housing Wire, 12/17)

Jim Cramer seems to think we'll see 3.5% rates - Cramer's Stop Trading (Seeking Alpha, 12/16). Then he said on Mad Money (12/17) that "Benjamin Booyah Bernanke" will "take mortgage rates down to 4%, I'm telling you, that's where they're going to go." For those who follow or know of Cramer, a statement like this is no surprise. Jim likes to entertain, he often changes his tune, and he has quite a few critics.

And even with the FED buying MBS, not all lenders are able to meet the increased demand for loans - Mortgage Rates Left In Dust By Treasury Yields, Failed Lenders (Bloomberg 12/18)

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