Mortgage-backed volume in the last two weeks of December averaged less than 70% of the 30-day average. Heading into the Christmas holidays, mortgages widened substantially on nearly $4 billion in originator selling - consisting of about 75% 4.5s and 25% 4s.

From Christmas Eve through midday Monday last week, mortgages tightened as a result of buying from real and fast money investors, who took advantage of the widening. The buying was also caused by a stable Treasury market and light supply.

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