Market News - March 17, 2008
The yield premium, or spread, on 30-year fixed-rate mortgage securities sold by Fannie Mae over 10-year notes reached 238 basis points on March 6, the widest since 1986. The spread was 207 basis points on Friday, compared with an average of about 112 basis points the past five years. The spread helps determine the interest rates offered to homeowners on new prime mortgages.
Kenneth Rosen, chairman of Rosen Real Estate Securities LLC, a hedge fund in Berkeley, California, and chairman of the Fisher Center for Real Estate at the University of California said``No one wants to lend much of anything today, the secondary market system for many loans has broken down. People don't trust the paper. We have an investor strike going on.''