US DATA: Mortgage Spreads Continue To Narrow, But MBA Activity Stays Weak
Dec-17 19:20
MBA mortgage application activity softened slightly in the latest week, but the more notable trend in recent weeks has been a continued narrowing of mortgage rate spreads.
- The MBA composite fell 3.8% W/W in the week of Dec 12, partially reversing the 4.8% rise the previous week but keeping activity at the overall subdued levels seen since late 2023 (at 1/3 below pre-pandemic levels). Purchase applications fell 2.8% for a 2nd consecutive fall, while refinancing apps pulled back 3.6% after soaring 14.3% the prior week.
- This pullback came as 30Y conforming mortgage rates ticked up, by 5bp to 6.38% for a 3-week high; Jumbo rates dipped 2bp after a 6bp rise the prior week.
- But this was due to a rise in underlying rates. 10Y Treasury yields averaged 7bp higher than the prior week (4.17% after 4.09%) with 30Y up 6bp (4.81% after 4.75%), with 10Y swaps up 8bp (3.76% after 3.68%).
- As such, mortgage spreads continued to fall. Conforming 30Y mortgage spreads to 10Y fell to 221bp and to 30Y to 157bp with spreads to 10Y swaps at 261bp, all the lowest since early 2022.
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