• 14 Aug 2008 at 4:06 PM
  • mortgages

Mortgage Spreads Blowing Out Toward March Levels

By John Carney

Yields on agency mortgage securities compared to U.S. Treasuries approached a five-month high today. Spreads rose to 215 basis points in intraday trading today, the highest level since early Mach 10, just prior to the crisis that leveled Bear Stearns, according to data compiled MKM Partners analyst Mike Darda. Over the past drbrtsl several weeks, the spread has been edging toward the 22-year high of 238 basis points set in March.
The so-called “agency mortgage bonds” amount to a $4.5 billion market guaranteed by federal agency Ginnie Mae or government-backed Fannie Mae and Freddie Mac. The rise of the spreads is widely viewed as a sign of stress in the financial system. More specifically, many believe that despite government moves to shore up Fannie and Freddie, the odds of the guaranteed bonds defaulting has increased.

Comments (15)

  1. 1
    Posted by guest | August 14, 2008 at 4:37 PM

    I think you mean $4.5 trillion market, Carney. $4.5 billion is 1 trade…

  2. 2
    Posted by guest | August 14, 2008 at 4:40 PM

    Has it really been drbrtsl weeks since we were last at this level, Carney?

  3. 3
    Posted by guest | August 14, 2008 at 4:45 PM

    do these posts even get proofed before they are posted?

  4. 4
    Posted by guest | August 14, 2008 at 4:56 PM

    Drbrtsl = several.
    Sincerely,
    Sherlock Holmes

  5. 5
    Posted by guest | August 14, 2008 at 4:59 PM

    And Sherlock-
    Does billion = trillion?

  6. 6
    Posted by guest | August 14, 2008 at 5:09 PM

    @5–
    Nope, billion = no;;opm

  7. 7
    Posted by hedge | August 14, 2008 at 5:34 PM

    He’s givlomh with you guys. Tr;sc.

  8. 8
    Posted by John Carney | August 14, 2008 at 5:44 PM

    Weirdest typo ever.

  9. 9
    Posted by BlackSwan06 | August 14, 2008 at 5:51 PM

    twas brillig.

  10. 10
    Posted by guest | August 14, 2008 at 6:17 PM

    @9: Ksnnrtepvlu.

  11. 11
    Posted by guest | August 14, 2008 at 9:52 PM

    Could the spread reflect prepayment risk? Lower mortgage interest rates would have to be a goal of the monetary authorities now to boost housing.

  12. 12
    Posted by guest | August 15, 2008 at 6:32 AM

    kthxbye

  13. 13
    Posted by guest | August 15, 2008 at 7:30 AM

    Prepayment risk?????
    Have you met someone saying , gee i think this foreclosed house down the road looks great value, i better prepay now and buy this baby!!! dont be silly

  14. 14
    Posted by guest | August 15, 2008 at 8:00 AM

    @13 – if you don’t know what pre-payment risk is, you probably shouldn’t comment on it. It makes you sound stupid….
    That being said, given the lack of availability of mortgage finance these days pre-payments do seem unlikely.
    And I think he means Trillion, not Billion too.

  15. 15
    Posted by guest | March 28, 2009 at 9:34 AM

    $4.5 billion is 1 trade?? oh, wish i never knew that too.
    http://www.reversemortgagepage.com/

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