Market Commentary: The Impact of Lock Pull-Through on Hedge Performance & Profitability
When an interest rate on a mortgage is locked with the borrower, the loan origination process is far from complete or pre-determined. Circumstances may arise that jeopardize the likelihood that the loan will close. The underwriter could find the borrower to be unqualified, a [...]
Automating the Secondary Marketing Function: Part III
Here we go, the last segment on the importance of automating your secondary marketing functions! When combined in any sequence, all eight reasons can provide lenders with improved processes, the ability to evalute lending strategies and a significant competitive advantage. I [...]
Market Commentary: The Impact of Rate Movement and Loan Characteristics on Servicing Value
In terms of the secondary market, a mortgage loan is essentially made up of two separate parts, the loan asset and the servicing asset – which may be split up, packaged, and sold separately. The largest of the two pieces is the loan asset, which is cashflow of the loan itself, [...]
Automating the Secondary Marketing Function: Part II
In the previous blog post on this subject, we covered how most loans in the U.S. mortgage market are sold to secondary market investors during or immediately following the origination process. The complexity that follows creates a series of functional requirements for lenders, [...]
Market Commentary: The Impact of Rates, Seasonality, and Appreciation on Mortgage Volumes
Mortgage originations are booming! While this is primarily fueled by the most recent refi boom, there are other aspects to this that, right now, are also favorable and adding fuel to the fire. The loan purpose is one of the main determinants of how volume will be affected by [...]
Market Commentary: Optimal Blue Examines the Mid-Cycle Adjustment
At its July meeting, the Federal Open Market Committee (Fed) cut its baseline interest rate by 0.25%, its first rate cut in more than a decade. Since the last rate cut, they have executed three rounds of Quantitative Easing (QE), significantly reduced the balance sheet from its [...]
Market Commentary: Rates Are Falling, Will It Continue?
With the 10-year treasury yield at 2% again, and the Federal Funds Rate (FFR) at 2.5%, it is natural for the rational mind to assume that this cannot go on for much longer. During normal market conditions, the treasury curve slopes upward; typically, short-term treasuries yield [...]
Automating the Secondary Marketing Function: Part I
In the U.S. mortgage market, most loans are sold to secondary market investors during or immediately following the origination process. Although elementary to some, this structural characteristic creates a series of functional requirements for lenders which are generally [...]
Market Commentary: The Impact of Low Rates on Lender Profitability
Consider the direct impact of our recent favorable rate trend on lender profitability. In the paragraphs below, we examine how lower mortgage rates can equate to higher margins for lenders as seen through the primary-secondary spread.
Market Commentary: Monetary Policy Impact on the Mortgage Market
U.S. monetary policy is the purview of the Federal Reserve (Fed) and is broadly responsible for the health and stability of the economy. The Federal Reserve Open Market Committee (FOMC) is the group that decides the monetary policy that the Fed will implement in order to fulfill [...]