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  • Writer's pictureDavid Fleig

MorVest Analytics Insights - Mortgage Duration

The Bloomberg Barclays U.S. MBS index duration now sits at 4.15 years, down from a recent high of 4.47 on April 22, though still above the year-to-date low of 3.84 seen on March 27, according to data compiled by Bloomberg. Its trailing one-year average is 4.94 years. (Bloomberg: Mortgage Duration Drop Means Refinancing Concerns are Back Again.)

The MorVest Analytics team responds:

BA: The question is how much effect this little rally has on refinance activity. We've seen two large rallies recently in December and March, and may see the burnout factor impact the current refi wave. A sustained decrease or leveling in rates will bouy the "trade up using equity" approach to buying a new home.

New home sales are surging YoY even though prices continue to rise, making the prospect of trading up more attainable as consumers cash out equity to place a sizable down payment. Supply is still soft, so we see the potential of bidding wars increasing cash at closing for the tradeup.

JS: I concur. The last refi boom was principally an equity take-out or trade-up. However, we are starting to see HPA cool, which can counterbalance some of the aforementioned refi play.

Blayne Adams, MSR Analyst

John Sullivan, EVP, Head of MSR Analytics

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