Yesterday was a tough day in the mortgage markets. With plenty of originator and hedge fund selling and only the Fed to buy it was not a pretty day as mortgages severely under performed. Days like this are going to happen and we as originators cannot really complain.
The reason being is that the price of mortgages have been artificially pumped up thanks to the Fed so from time to time they get regurgitated. Think about how your stomach feels after 8-12 White Castle hamburgers. Too much of a good thing often comes back to bite you in the rear-end. This is what happened yesterday to mortgages and will continue to happen sporadically because the price of mortgages are just way too high. A high priced asset that is callable is usually a recipe for disaster but thankfully we have Uncle Ben to provide the roll of a support bra and keep those assets high. But every now and then reality is more powerful than deception.
Today is another day and the good news is that we are seeing better buyers of mortgages. The 10yr is unchanged at 1.60% but mortgages are up a little.
We did get the weekly MBA Application Survey this morning and it did show some signs of life for originators. Here are the highlights: