Benchmark's Drop Unlikely to Make Usual Waves

The falling benchmark 10-year Treasury yield had accelerated its decline Thursday morning and had plummeted to a low below 3.2% that has not been seen in some time, but the move appears unlikely kick off a refinancing wave to the extent it has in the past. Today's tight lending standards and relatively wider spreads in mortgages are likely to prevent the kind of refi spike that a lower benchmark yield has been indicative of historically, said Art Frank, director and head of mortgage-backed securities research at Deutsche Bank. However, the Mortgage Bankers Association's index has indicated somewhat of an uptick in refis recently; and in March, around the time the benchmark yield was last relatively low, the index did register somewhat of a jump in refinancing, he said. The benchmark yield has been falling in recent days due to what fixed income strategists at Jefferies & Co. Inc. said has been a flight-to-quality into the U.S. government bond stemming from general uncertainty in the larger market.