Prices for mortgage servicing rights remain strong as the supply of servicing for sale is declining and investors are hungry for more. MSRs tied to both low interest rates and high interest rates are being met with sustained demand.

Mr. Cooper Group’s owned servicing volume took a downturn in the first quarter. Some large banks also continued to reduce their owned servicing.

The nonbanks took negative marks on their large holdings of mortgage servicing rights as hedges didn’t fully offset a decline in interest rates on mortgages during the first quarter.

One bidder recently agreed to pay north of 6.25 times the servicing fee for a high dollar volume of agency MSR. Sound crazy? Maybe, but servicing prices are at a 25-year high for low-coupon product.

With bids for MSRs remaining strong, Guild Mortgage sharply reduced the share of its mortgages originated with servicing retained in 2024.

MSR buyers believe that there will be plenty of supply of the asset this year as mortgage originators face difficulties from high interest rates. UWM, the largest lender in the industry, is willing to sell if the price is right.

Four companies among the top 10 primary servicers upped their portfolios by double digits on a percentage basis in 2024 — all nonbanks. (Includes three data tables.)

Lenders are facing a tough market for originations, helping to prompt sales of servicing. The supply of MSR is coming both from older vintages with interest rates well below current rates and new production in which a lender might not want to hedge the MSR.

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