First the good news: the yield on the benchmark 10-year Treasury hit yet another new low Wednesday afternoon, but many mortgage-related stocks experienced losses ranging from 2% to 8% in a morning selloff.
At press time the 10-year was trading at a yield of 2.12%, after bottoming out at 2.10% early in the morning. Mortgage bankers have been reporting strong application volume this week led by refinance applications.
But declining rates aren't necessarily good news for share prices. The Dow Jones Industrial Average was off by 467 points earlier but had recaptured some of those losses by the early afternoon.
Mortgage stocks hit the hardest include technology company Ellie Mae (-8%), Bank of America (-6%), MGIC (-6%), and PMI (-6%).
Mortgage insurance stocks, in particular, have been hard hit of late, even though some firms, such as Radian, have been reporting improvements in their delinquent loan inventory.
Then again, not all MIs have been as fortunate as Radian. Industry volume leader MGIC reported a 641 unit increase in its delinquencies during July, but blamed the problem on “seasonality.”
