Secondary Market Corner

By: Pete Radigan, Senior Consultant

SECONDARY MARKET CORNER 

Big news from the “Corner” is the drop-in interest rates and the commensurate decline in rate lock volume as rate negotiations became the buzz word, however, pull through rates remained at a healthy 75% as lenders moved application through the pipeline. The 30-year conforming to 10-year treasuries remained in a tight trading range with the 10-year treasuries at 62 basis points.

With the drop-in rates the MBA reported this week a 5.1% increase in application volume. Best efforts to mandatory spreads remain rich at 62 basis points while uncertainty continues to weigh on the market. A recent informal survey of SCA clients indicates a move to increase the loan loss reserves closer to the 2% range as the forbearance/modification/foreclosure process is in uncharted waters.

The “Corner” would like your thoughts on ROE as a measure of mortgage profitability and comments on the efficiency ratio.

Secondary Market services and whole loan trading offered by Spillane Consulting Associates, Inc.