While we haven’t yet seen enough losses to justify a negative reprice from most lenders, we’re now on the edge of risky territory. From here, each new tick of weakness does more to ratchet up the risk. Beyond that, it’s Friday afternoon on a week that’s seen a strong rally. Not only are such afternoons well within their right to exhibit some “late day leakage,” but lenders who’ve received as many locks as they’d like are more likely to think only once about a repricing.
Fannie 3.5s are 1 tick up on the day still at 101-30, but this is down from 102-06 earlier this morning. 10yr yields just broke their highs of the domestic session, moving up to 2.592. There’s nothing drastic or dire going on here, to be sure (after all, 2.59 is the heretofore LOW end of the recent range), but from an intraday risk standpoint, we’re towing the line.
On one final note, the presence of reprice risk is highly lender-dependent at the moment. If one of the earlier positive reprices was any indication, some lenders are well-insulated against the need to reprice and may in fact be looking for volume. Those who’ve kept pace with market movements are at more risk–especially if they have a history of pipeline control reprices or are in the “early-to-act” crowd.