Quality of Data: Refined Accuracy and Speed
Rate Alert is built on an institutional-level MBS trading feed. Unlike other services, Rate Alert tracks trading on all
Conventional and Government Fixed Mortgage Backed Securities. Our service also filters out "trading noise". This means
smaller less significant non-institutional trading desk contributions are ignored; creating the most stable, real-time
depiction of how large lenders are viewing the MBS markets. Our system is mechanically tied to the market to automatically
alert you in advance of potential Lender re-pricing with no potential for human error. And best of all its offered to
you at a fraction of the cost of other services.
That's why over ten thousand Originators protect their pipelines with Rate Alert!
Email Notification
Given that our system is mechanically tied to the MBS, pricing and alerts are sent automatically. The more emails you
receive, the harder your service is working for you. On average you will receive four (4) alerts on any given day; more-so
on volatile trading days. Additionally, you will receive daily lock advice. No one likes a full Inbox but we implore you to
read every single alert to stay abreast of the markets. If you prefer to receive your alerts via SMS text messaging you
can upgrade to Rate Alert Mobile.
Coupon Pricing vs. Interest Rates: The inverse relationship.
Securities are a stream of payments at a given coupon rate. If someone agrees to pay less for a given coupon rate,
they ultimately end up with a higher return or yield on that trade. When markets weaken investors are less likely to bid,
meaning lower coupon prices and higher yields or rates. So, when MBS markets soften, interest rates rise and Lender
pricing worsens. Conversely, when MBS markets strengthen, more is paid for a given coupon rate and the yield is
lower. When this happens, rates improve. Generally speaking, Mortgage Backed Securities are considered very conservative
investments among investors. This means that bad economic news, or things that adversely affect the stock
(equity) markets generally has a positive affect on MBS demand, meaning rates lower based on bad economic news.
Bond pricing is measured in 1/100ths or Basis Points; referred to in your alerts as BPs. Some traders reference "ticks"
with regard to pricing. Ticks are simply 1/32 rather than BPs which are 1/100ths. There are many technical facets
that affect MBS pricing and interest rates throughout any given period. Rate Alert and David Shirmeyer keep you
informed of the potential trend and market influences that affect Mortgage Rates. Rate Alert publishes daily AM and PM
Lock Advice that boils these events and factors down to assist in accurate short term rate forecasting.
Not the Interest Rate, the Coupon Rate!
You'll see a coupon rate on every alert you receive. Understand that this is the BOND coupon rate, not an interest rate being
offered by any particular Lender. This is the rate investors receive when buying or investing in the coupon. Alerts will be
based on whichever coupon is most actively being traded; giving you the best picture of what the market is really doing.
AM Tracking Quotes: Your Most Critical Setting
Executive Members can set their own AM Tracking Quote; to be e-mailed whenever a specific lender generally issues
pricing each day. The tracking quote is your pricing “starting point” each day and gives you coupon pricing relative to
the opening price (8am EST). Your Tracking Quote will be defaulted to 9:30 AM EST. This is generally when most lenders issue their morning pricing.
But you can change this to coincide with the given behavior of any particular pricing desk in your Alert Controller. What makes
the AM Tracking Quote so critical is actually quite simple. If a lender issues pricing at the same time as your AM Tracking Quote,
subsequent market changes from this point forward in the day should offer the best indication how likely they might re-price
and in which direction.
Types of Alerts
Rate Alert offers two Re-pricing Alert services. Both can be managed in your own personal Alert Controller. You can elect to receive
Instant Re-pricing Alerts based on real-time market volatility which is overwhelmingly preferred by our Members.
Instant Re-pricing
Alerts are sent whenever MBS pricing moves enough to potentially affect lender pricing; usually in advance of re-pricing. Free members
can choose
Static Pricing Updates to be sent periodically throughout the day.
Static Pricing Updates – General re-pricing awareness
Static Pricing Updates are very handy for those who want a general idea of what to expect in the way of potential Re-pricing. In addition to
receiving an AM Tracking Quote, Static Pricing Updates are defaulted to be sent at, 1:30pm with a Closing Bell at 5:30pm. These Updates give you
live FNMA coupon pricing at these times.
You can set your personal alert preferences on Static Pricing Updates in the Alert Controller to
receive them more or less often. But remember, Instant Re-pricing Alerts are the true value of Rate Alert and most widely used by serious
lending professionals.
Instant Re-Pricing Alerts – Most widely used in the industry!
Each morning you will receive an AM Tracking Quote; defaulted at 9:30am EST (when most lenders issue pricing). AM Tracking Quotes are the beginning
reference point for MBS pricing movements. This means you will be alerted of changes that
could affect pricing from this point forward. You can adjust
the time of your AM Tracking Quote to mirror a particular Lender's pricing habits. For example, if your lender typically prices at 10:00am you can
adjust accordingly in the Alert Controller. The AM Tracking Quote will give you the live pricing at that point with a comparison to the opening price (8am EST).
Rate Alert uses 5:30pm EST as it's "Closing Bell" so your AM Tracking Quote will be compared against 5:30pm (EST) of the prior trading day. After
your Tracking Quote, Rate Alert will notify you with Real Time Float Alerts or Lock Alerts.
Float Alerts are sent whenever MBS pricing falls by enough
to potentially adversely affect lender pricing by 1/8 in FEE (roughly 12 BPs). Conversely,
Lock Alerts are defaulted to be sent whenever MBS pricing
decreases enough to potentially improve lender pricing. You can adjust your tolerances in your Alert Controller to your desired level of sensitivity.
These movement alerts give you current pricing and how it relates to the opening price along with the last three (3) alerts sent that day. Therefore,
each Alert you receive offers comprehensive insight as to how the market is "behaving" that day.
Setting your Movement Alert Triggers
Basic and Executive members can set their Instant Re-pricing Alert tolerances in the Alert Controller. Some Originators want wish to be Alerted when
pricing is at risk of moving by only .125 in fee while others are only interested in being notified when pricing can potentially move by .25 to .375.
Adjusting your "Instant Alert Trigger" is quite easy to understand. Bond pricing is presented in hundredths or "Basis Points" (bps) while lender pricing
generally moves in 1/8ths. 1/8 is equal to .125, 1/4 is equal to .25, 3/8 is equal to .375, 1/2 is equal to .50 in pricing and so on. Conversion to
Basis Points is very easy to understand. Take your lender fee pricing and simply move the decimal 2 places to the right and you have the equivalent
in bps. This means 1/8 in fee movement (or .125) is equal to 12.5 bps. So if you'd like to be Alerted whenever MBS pricing moves enough to affect
lender pricing by .125 in fee, you would select 12 bps as your Trigger. If you want to be alerted when bond pricing moves by .25 you would select
24 bps. Sometimes it takes a bit of fine tuning to get your service exactly where you want it, but the system is designed to be as sensitive as you
want with the benefit of instant notification.
Beating a Specific Lender's Pricing Desk
If you're not beating a specific lock desk, don't be discouraged. Remember; lender pricing is managed by human beings. And everyone has different
philosophies with regard to pricing. Some lenders will be slow to re-price for the better if they are near operational capacity and they might be
quick to increase for the same reason and so on. Conversely they may lower pricing quickly or be slow to increase if they are trying to fill a funding
commitment.
The first thing to remember is that your AM Tracking Quote is your most critical setting in your Alert Controller. Again: This is your
reference point for all future MBS movements that day. If you start Tracking at the wrong time of day, even if you’re set at 12 bps you can still
miss a lender re-price. And just because you receive rate sheets at a certain time of day, that does not mean this is when they set their pricing.
Members are encouraged to experiment with earlier AM Tracking Quotes and increase or decrease your Trigger settings. Chances are you'll be able to
beat your lock desk consistently after a week or 2 of testing and changing. The bottom line is that you need to understand that if you're receiving
Lock or Float Alerts, the market is moving and you need to beware!
Imperfect Science
Predicting any given lender's pricing strategy is impossible. Every lender has different pricing goals and hedging practices.
So you might find some lenders acting inconsistently with any given movement alert but rest assured when you
get an alert, the market is moving and you need to prepare yourself. Don't leave your pipeline to chance.
CLICK HERE
to arm yourself with Rate Alert today!
