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  • Writer's pictureWWH

MBS Highway Daily Updates 12/28/2022

Current position: Carefully Floating

Stocks are higher and Mortgage Bonds are lower to start the day.

Pending Home Sales

Pending Home Sales, which measure signed contracts on existing homes, fell 4% in November, which was weaker than the decline expected. Sales are now down 38% year over year. Interest rates started dropping in mid-November and is likely not fully factored into this report. We think that the figures could get better from here, as soon as next month, but there are seasonal factors that typically make this time of year slower in housing.

The NAR said with mortgage rates falling throughout December, home - buying activity should inevitably rebound in the coming months and help economic growth.

CoreLogic Loan Performance

CoreLogic released its loan performance insights for October, and all of the components were unchanged from September. Loans 30 days or more delinquent stayed at 2.8% , which is a 1% improvement from a strong housing market last year. Those 90 days or more remained at 1.2%. Lastly, loans in foreclosure were unchanged at a near multi-decade low of 0.3%.

For all the talks of housing being unhealthy, all the delinquency figures are at very healthy low levels. For perspective, total delinquencies were more than six times higher during the housing crash.

Technical Analysis

Mortgage Bonds continue to trade in a range between support at the 50 - day Moving Average and a dual overhead ceiling at the 100 - day Moving Average and 100.758 Fibonacci level. Looking at the stochastics, which is a momentum indicator, Bonds are getting close to oversold territory, and once there is a crossover, it could mean a reversal is in order. The 10 - year Treasury is lower this morning but is now contending with the 50 - day Moving Average support level, which it broke above yesterday. If yields cannot get below this level, the next ceiling is at 3.90%. Begin the day carefully floating.


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