For decades, the Agency Mortgage-Backed Securities (MBS) market operated on an implicit, foundational constant: a loan’s representative credit score meant Classic FICO. Capital markets desks built trading algorithms around it, risk engines calibrated duration based on it and specified pool buyers paid billions in pay-ups resting on their predictable prepayment behavior. That baseline is shifting. […]

We’d be the first to remind you that mortgage rates are primarily determined by trading levels in the bond market–specifically those for mortgage-backed securities (MBS). That said, there are days where rates don’t do exactly what MBS suggest. Today was one of them. According to the bond market, mortgage rates should have been much higher

We love it when a plan comes together. Heading into yesterday’s Fed announcement, the hope was that a rate hike would reassure investors in longer-term bonds (like those that underlie mortgage rates). We also didn’t expect that benefit to necessarily play out on the day of the hike itself (it didn’t).  In fact, Fed day