THE BASIS POINT

Ginnie Mae: No Slouch On MBS Issuance

There’s always lots of talk about Fannie and Freddie in the mortgage bond (aka mortgage backed securities or MBS) world, but what about their distant cousin, Ginnie Mae. They guaranteed more than $26.4 billion in mortgage-backed securities in April. That compares to about $24 billion in March and $26 in February.

Unlike F&F, Ginnie doesn’t buy mortgages. Ginnie Mae, which raises capital from investors in the global credit markets, guarantees the P&I payments to investors of MBS’s while the FHA or VA usually insure the underlying loans. And Ginnie’s numbers, nearly $1.5 billion per day, include single-family pools, reverse mortgage MBS, and multi-family. Here are more Ginnie stats.

Few people in the mortgage industry are complaining about rates, although, given the low mortgage rates, there are some concerns about actually receiving the locked loans, and having too much MBS coverage on for mortgage banks. Yesterday we saw another improvement as the Case-Shiller index came in about as expected and then we had disappointing prints in the Chicago PMI and Consumer Confidence. It was a day where both stocks and bonds rallied, and traders reported seeing “solid domestic real money buying come through the desk, focused mostly in the front end of the curve for the month end trade.”

Today we’ve already had a fair amount of news. The MBA reported it sample of mortgage applications fell for the first time in five weeks as refinancing cooled, falling 4% last week. Purchases were unchanged, but refi’s were down almost 6% and now account for less than 66% of apps. We’ve also had the ADP Employment change, always of dubious predictive ability for Friday’s employment data. ADP numbers only showed a gain of 38,000 jobs, with an April revision downward. Currently, given the poor ADP number and (now) the declining hope for a decent number Friday, we find the 10-yr yield at 3.02% (!) and MBS prices better by .250.