If projections by the MBA are correct, interest rates for mortgages are levelling off, which should relieve some of the pressure lenders are facing on originations and profit margins.

MBS and ABS tied to floating-rate assets could see rising delinquencies as interest rates increase. Inflation also remains a concern, though Fitch and Moody’s suggest that most deals can weather the storm.

Originations of adjustable-rate mortgages declined by 4.8% from the third to the fourth quarter and by 13.7% for the full year 2021. Bank of America was the top ARM producer. The loans largely remain in portfolio. (Includes data chart.)

Borrowers with loans in various types of MBS and ABS could be stretched as interest rates increase, according to industry analysts. Prepayment rates are also likely to slow.

Loan-level details from CoreLogic provide a comparison of interest rates charged on jumbos and conventional mortgages. One finding: Spreads returned to pre-pandemic levels in the second half of 2021.

Historic home price appreciation and record low interest rates helped Fannie and Freddie increase income and cut costs. (Includes data chart.)

The GSEs ride home price appreciation and low interest rates to record earnings in the second quarter.