How busy are companies? So busy that they are “dissuading” locking. On Tuesday, Chase wholesale went so far as to send this out to their brokers, “Due to high registration volume, effective 3:00 PM Eastern Time, Chase is temporarily suspending all new registrations and locks until the next business day’s rate sheets are delivered.” Couldn’t they just price themselves out just like other lenders? Yet the headlines continue to show borrowers that they can find 30-yr mortgages below 5%, especially at bank branches.

Every mortgage company, and every mortgage company’s investor base, is pricing huge profit margins in. First, because they can, and second, they are trying to make hay while the sun shines. Many are pricing in a point or more of profit margin, and still taking locks. So Treasury rates can do whatever they want, and mortgage security rates can do whatever they want – profit margins are at play. Eventually, however, the market will change the profit margins; otherwise companies will watch their locks flowing, other things being equal, to other lenders. It is doubtful if any type of collusion exists – the mortgage market is still too competitive and scattered to allow that, but many mortgage companies tend to think the same way.

Mortgage-backed securities continue to outperform Treasury securities as the Fed program buying has spurred the markets. Fannie 4% securities, which would include mortgages from 4.25% up to 4.625%, are trading at 101.00. Throw the servicing released premium in there, and the price is above 102.00, for a great 2 point rebate – in theory. But I have not seen too many rate sheets that are offering brokers a 2 point rebate for a 4.75% loan. The last 1 point move in 4.5’s over 4 days would have originators buying back hedge coverage in the past. But the MBS moves have not been fully reflected in retail pricing at any level, so this activity may me muted.

This morning the only news was Jobless Claims. New claims for unemployment benefits last week unexpectedly fell to their lowest level since mid-October, but the number of those remaining on jobless rolls rose to a 26-year high. Initial claims for state unemployment insurance benefits fell 24,000 to 467,000 last week, the Labor Department said, coming well below market expectations for 540,000. It was the lowest reading for initial claims since the week ending Oct. 11 last year, when the figure was at 463,000. Tomorrow, of course, we will see the government’s unemployment figures, which are expected down about 500k. Currently the 10-yr is at 2.47% and 30-yr mortgage prices are better a smidge.

Just when you have lost faith in human kindness, someone who teaches at Kean Elementary in Wooster , Ohio forwarded the following letter. The letter was sent to the principal’s office after the school had sponsored a luncheon for the elderly. An old lady received a new radio at the lunch as a door prize and was writing to say thank you. This story is a credit to all humankind. Forward to anyone you know who might need a lift today.
Dear Kean Elementary:

God bless you for the beautiful radio I won at your recent senior citizens luncheon. I am 84 years old and live at the Sprenger Home for the Aged. All of my family has passed away. I am all alone now and it’s nice to know that someone is thinking of me. God bless you for your kindness to an old forgotten lady. My roommate is 95 and has always had her own radio, but before I received one, she would never let me listen to hers, even when she was napping. The other day her radio fell off the nightstand and broke into a lot of pieces. It was awful and she was in tears. She asked if she could listen to mine, and I told her to kiss my —.

Thank you for that opportunity.
Sincerely, Edna