Mortgage Market Commentary

Mortgage Market Commentary

Mortgage backed securities (MBS) prices are near unchanged (rates flat) as the prospect of increasing debt sales damp demand for fixed income assets; FNMA 4.5% coupon 102.17bps, +3bps & 4.0% coupon 100.75bps, +3bps. We will be switching the current coupon from 4.5% to 4.0% to better reflect current market conditions. To stem the longest recession since 1930, the U.S. government has spent, lent or guaranteed $12.8 TRILLION, an amount the approaches the value of everything produced in the country or $42,105 for every man, woman and child in the U.S. Case/Shiller Home Price Index tumbled 19% in January from a year earlier, the fastest drop on record as demand plummeted and foreclosures rose. A glut of unsold properties may keep prices low, shrinking household wealth and damping spending. Lower prices and borrowing costs however are attracting some buyers, evidenced by the National Association of Realtors affordability index at record levels. Chicago PMI fell to 31.4, below the consensus forecast, as did Consumer Confidence, which came in at 26. Most economic data in March exceeded expectations, so these reports bucked the trend and quells talk of the economy bottoming out anytime in the near future.