Rate Rise, Refi Drop Bode Well for Mortgage-Backed Securities

By Brockman, Joshua | American Banker, December 29, 1998 | Go to article overview

Rate Rise, Refi Drop Bode Well for Mortgage-Backed Securities


Brockman, Joshua, American Banker


By JOSHUA BROCKMAN December has been a slow month for mortgage-backed securities, but lenders and investors expect demand to pick up in the new year thanks to a recent uptick in mortgage rates.

The 30-year fixed-rate, no-point refinance mortgage was around 7% last Wednesday, compared with a low of 6.5% in mid-October.

The rise is already discouraging refinancing, and that is good news for investors in mortgage-backed securities, who lose interest and principal income when homeowners prepay their loans.

"Investors are probably going to be increasing their allocations to the market," said David N. Sherr, managing director at Lehman Brothers.

"I think mortgages are going to be one of the star performers in the first quarter or first half of next year, if rates stay the same," said William J. Denton, vice president for secondary marketing at PNC Mortgage in Vernon Hills, Ill.

December is usually slow, because issuers typically avoid adding more securities and lending slackens as yearend approaches. "We've seen a decline in our production in the last 30 days," Mr. Denton said. Rising rates have discouraged borrowing, he said.

"What has kept the spreads from really getting clobbered here is both Fannie and Freddie have been very supportive of the mortgage market in the last two months," Mr. Denton said.

Spreads on a Fannie Mae or Freddie Mac 6% 30-year conforming mortgage have fallen 40 basis points in the last three months because of purchasing by the two government-sponsored enterprises for their own portfolios. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Rate Rise, Refi Drop Bode Well for Mortgage-Backed Securities
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.