Mortgage flows last week were weighted by slightly stronger originator selling and sidelined investors. Over the Wednesday-to-Wednesday period, spreads on 30-year 5.5s moved out seven basis points while 6s widened by one. Meanwhile, 15s outperformed 30s with spreads three basis points weaker in 5% coupons and flat in 5.5s. With rates moving lower and the prospects of increased volatility and lower supply, investors preferred 15s.
The Mortgage Bankers Association (MBA) reported a mixed report on mortgage applications for the week ending Feb. 21. The Purchase Index fell 7.5% to 309.0, while the Refi Index jumped 10.1% to 5989.6 on a seasonally adjusted basis. On an unadjusted basis, purchases were down 14.2% and refi's were off 1% to 5390.6. Analysts expected the Refi Index to be higher as rates hit new record lows last week. The MBA also reported that refi activity increased over the week. As a percentage of total applications, refi applications rose to 75.3% from 72.5%. ARM share activity held steady at 13.3% versus 13.2%.