Desperate times call for desperate measures. But, perhaps, having the GSEs create demand by purchasing (a lot) more of their own MBS in an effort to lower rates is a bridge too far.
The residential finance industry is hoping the Federal Reserve and/or the GSEs might come to the rescue by playing a role in driving down mortgage rates. How’s it looking, then? Not so good.
Mortgage rates remain stubbornly high by modern standards with the spread between the 10-year Treasury and MBS showing no mercy. Is there any hope on the horizon for a reprieve? Probably not.
Federal Reserve examiners didn’t do enough to prevent the failure of Silicon Valley Bank, according to the Fed’s IG. Now, the Fed is working to address interest rate risk tied to bank holdings of MBS and ABS.
Margin calls from repo lenders are always a risk when collateral values decline, which is why MBS holders, like REITs, are under watch. The yield on the 10-year Treasury is at a 16-year high — that’s the bad news. The good news: This may be the peak of the cycle.
An unsecured debt offering by a mortgage REIT? That’s correct. PennyMac is on the board with a small note deal. Might this be a sign of things to come?
Larger banks say federal regulators’ proposal to increase capital requirements is more stringent than international standards and came with insufficient explanations.