Mortgage flows last week were relatively light following the Thanksgiving holiday break. According to one trader, the mortgage market was jittery on the higher volatility associated with upcoming events such as the non-farm payrolls report and the Dec. 8 deadline for Iraq to disclose weapons of mass destruction. This kept many investors in a sidelined or profit taking mode in the early part of the week. By Wednesday afternoon, however, there was better support from banks and CMO desks in 30-year 5.5s and 6s. Last week also saw an increased interest in higher coupons. Traders attribute the better buying as a hedge against an increase in rates as well as potential for improved technicals in the months ahead.

Originator selling held within recent levels of $1 to $2 billion per day. Traders noted that if the market turns lower and stays lower, a pickup in mortgage banker selling would be expected.

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