Rate Desk Wednesday, September 2, 2020

2085

September 2, 2020 edition of Yield PRO TV Rate Desk with Michael Thomas. Relationships of leverage to risk; probability of loss vs loss given default and which carries more risk.

Rate Desk notes September 2, 2020
  • Indices up, rally of record closings
  • Crude $41.35
  • UST yields .65
  • 223(f) 2.15%
  • 221(d)(4) 2.75%
  • Fannie 2.95%
  • Freddie 2.95%
  • US passed 100% debt-to-GDP
  • Is leverage a bad thing?
  • Relationship of leverage to risk
  • Probability of loss vs loss given default
  • HUD FHA leverage provides better cash-on-cash return
  • Low rate + longer term = lowest loan constant
  • 11K HUD FHA mortgages—only 6 were 30-days past due
  • GSEs use interest-only
  • Which carries more risk? You decide?
  • Lower leverage does not mean lower risk