Notes From the Mortgage Desk: MBS Update and Year-End Strategies
December 13, 2021
The Fed Announces Taper on MB
On November 3, 2021, the Federal Reserve (Fed) finally announced a taper on mortgage-backed securities (MBS) of $5 billion per month. On that date, the Fed’s MBS balance sheet stood at $2.53 trillion. We have seen only some early signs of loosening of spreads since then. This is likely attributed to the fact that the Fed still owns those $2.5 trillion of MBS, which reduces the float, plus there continues to be additional, strong demand from banks and other investors.
FHLBank Chicago Membership Has Its Advantages
We’ve seen a noticeable uptick in Government loan executions, because you took advantage of our Mortgage Partnership Finance® (MPF®) Traditional Government program offering in October. Thank you for your participation in our special! Due to tight margins on our MPF conventional products, have you considered MPF Government loans to diversify your product mix? By utilizing this tactic, your institution may be able to obtain better margins and help more of your borrowers.
The Price Is Right
In early November and December, we improved prices for MPF Traditional 30-year and 20-year loans in the 3.125% and 3.25% note rates, but that’s not all. There was also an increase on our 15-year loan prices for 2.75% and 2.625% note rates. In particular, the MPF Traditional 20-year conventional, low-loan balance and high loan balance pricing has improved for your customers seeking to complete a rate and term refinance. We made this change as a strategic move to improve your competitiveness in your local markets.
In addition, we’re interested in MPF Traditional bulk purchases of $10M or more at negotiated prices. If you have that size to sell, please reach out to me.
In Case You Missed It
On November 10, 2021, the MPF Program announced MPF Xtra® selling guide updates. Fannie Mae expanded eligibility requirements for the RefiNow option.
If you’re interested in learning more about these updates and strategies,please don’t hesitate to contact your Sales Director.