Notes from the Mortgage Desk: Positive Pricing News

Positive Pricing News 

As we head into the tail end of 2020, our team continues to observe positive news with all-time low mortgage rates driving both purchase and refinance loan growth. Due to these all-time lows, we are currently offering our most attractive and competitive Mortgage Partnership Finance® (MPF®) Program Traditional 30-year mortgage rates in the 2-2.5% range – and the price improves as the borrower rates drop. If you want to offer the most completive mortgage rates, take a look at our MPF Traditional grids to see the details and contact me if you want to take advantage of the current market conditions.

Uniform Mortgage-Backed Securities - We Are Watching the Market

The Federal Home Loan Bank of Chicago (FHLBank Chicago) has been closely watching the Uniform Mortgage-Backed Securities (UMBS) 1.5% security trade. The UMBS 1.5% prices have risen since September in anticipation of Fed purchases of these bonds, which finally began on October 29, 2020. We believe this could lead to another potential drop in mortgage rates as UMBS prices increase to premiums, driving originator rates to below 2.5% as well, once pipelines begin to clear.

Elevated Payments in Sustained Refinance Activity

Due to persistently low rates and the resultant very high rate of prepayments we’ve observed in our MPF loan portfolio, this has put some pressure on pricing and increased monitoring of prepayments by member and loan characteristics. If the Fed’s “lower for longer” policy statement holds true, we anticipate seeing this in the longer-term. We ask that our PFIs be mindful of the early pay-off clause in our guidelines

Questions?

If you’re interested in learning more or have any questions, please don’t hesitate to contact your Sales Director
 

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