Officials from the secondary mortgage market believe innovations in products, policy and technology can support lenders and borrowers through a difficult housing market.
Hope springs eternal for a revival in Ginnie Mae early buyout activity this year. Two missing ingredients: a steeper decline in mortgage rates and an end to the VA moratorium on foreclosures.
The mortgage industry keeps pining for a rate cut but so far the Fed has resisted. This week, a hotter-than-anticipated CPI reading stalled momentum on the rate front and MBS prices headed lower.
Lenders typically hedge loans by short selling the type of security those loans will eventually go into. However, if the market for that security is unattractive, they can cross-hedge into better performing markets if their pricing movement correlates with the loans.
The flow of refinance mortgages into agency MBS rose smartly from January to February. And year-to-date total issuance was up slightly from early 2023.
Prepayments on VA loans in Ginnie MBS jumped in February and will likely remain elevated in March. It’s a recurrence of an ongoing problem for Ginnie and VA: streamlined refinance business.
Banks, the largest holders of agency MBS among investor groups, aren’t expected to be big buyers this year. Money managers helped to fill the void left by banks last year, but that might not continue into 2024.