With inflation weakening and continuing to lag behind the Federal Reserve Open Market Committee’s 2 percent target, the Fed this week surprised no one and unanimously decided to leave the federal funds target rate unchanged at 1.00 percent to 1.25 percent. The U.S. central bank also indicated it will likely begin to gradually unload its enormous balance sheet “relatively soon,” which market participants and observers read as sometime this fall – probably with an announcement in September, with run-off set to begin in October. In terms of its portfolio, the FOMC said...
Loans collateralized by multifamily properties experienced the biggest increase in the delinquency rate among commercial property types during the month of June, rising 133 basis points to 4.10 percent, according to a new CMBS report from Moody’s Investors Service. But it may not be as bad, sector-wise, as it appears at first glance. “The difference was due mainly to two newly delinquent loans, both multifamily portfolios in the MLMT 2007-C1 transaction,” explained Kevin Fagan, a vice president and senior analyst with the ratings service. “Assuming these loans were current, the multifamily delinquency rate for June would be 2.57 percent.” Delinquency rates increased...
A new source of risk for residential MBS has emerged in the wake of Wells Fargo’s recent decision to hold back significant funds from MBS transactions to cover potential litigation expenses resulting from investor claims. In its latest report, Moody’s Investors Service warned that trustee holdbacks, such as Wells Fargo’s action, have a negative effect on the MBS transactions. Such actions reduce, at least temporarily, the funds available to pay interest and principal to bondholders, the rating agency said. Last month, Wells Fargo notified...
JPMorgan launched a new index this week aimed at connecting with clients looking to invest in Fannie Mae, Freddie Mac and Ginnie Mae MBS. The company said it is the first institutional agency mortgage index built on individual security valuations. The index, referred to as MAX, is billed as a “contemporary and comprehensive” benchmark of the agency MBS market. It combines 30-year, 15-year and 20-year MBS in an index that the bank says contains more than 400 aggregates that cover almost 85 percent of the agency market. And because it updates from the sixth business day of the month instead of the 15th, as most other indices do, JPMorgan said the MAX reduces a number of tracking errors. “Agency MBS is...
A number of lenders have experienced a sharp decline in refinance volume without a meaningful increase in purchase-mortgage originations, according to Jonathan Corr, president and CEO of Ellie Mae.
Large banks continue to dominate the business of servicing Fannie Mae and Freddie Mac home loans, but a group of hard-charging non-depository institutions are gaining ground. A new Inside The GSEs analysis of Fannie and Freddie mortgage-backed securities disclosures shows that total single-family MBS outstanding actually declined slightly, by 0.1 percent, during the second quarter. This was due to a 0.3 percent drop in Fannie MBS servicing – the figures do not include servicing of whole loans held by the enterprises – while the Freddie market grew 0.3 percent. Some 46.2 percent of Fannie/Freddie MBS servicing was held by banking organizations with more than $100 billion in assets. That included four of the top five GSE servicers and seven of the top 10.
The Federal Reserve’s effort to normalize its balance sheet later this year would cause no significant falloff in the agency mortgage-backed securities market over the next six to 12 months, according to global investment firm Loomis Sayles. In an analysis, the firm concluded that agency MBS remain attractive for now with modest excess returns for agency MBS versus Treasurys. “We favor a modest overweight agency MBS stance versus Treasurys for the remainder of 2017 and ...
Mortgage origination volume was up sharply in the second quarter of 2017, but total production this year still trailed the pace set in 2016 because of slumping refinance activity. An estimated $455.0 billion of first-lien mortgages were originated in the second quarter, according to an exclusive new Inside Mortgage Finance ranking and analysis. That was up 18.2 percent from the January-March cycle, but production over the first six months of 2017 totaled just $840.0 billion, off 6.7 percent from the same period last year. Most other mortgage market indicators sent...[Includes two data tables]
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