While agency MBS trading typically slows towards the end of the year, the average daily volume of trades in December 2022 was the lowest on record since the beginning of 2020. Banks are showing weak demand for the securities.
The FHFA will significantly reduce a controversial fee for comingled securities in UMBS; no consistent trend in delinquencies and losses across MBS and ABS in December; term SOFR not an option as GSEs leave LIBOR behind.
Increasingly, nonbanks are using their “owned” MSRs as collateral for repo lines. And why not? Servicing values continue to be strong, and prepayments are almost non-existent.
Spreads tightened this week for a new CRT transaction from Fannie and new non-agency MBS; prepayment rates on agency MBS exceptionally low; lessons from Silvergate Bank’s crypto activity.
Residential MBS issuance took the biggest hit from skyrocketing interest rates in 2022, but commercial MBS and ABS production were also down significantly from the previous year. (Includes three data charts.)
With lenders pushing mortgages that include a temporary buydown feature, MBS investors are pondering prepayment behavior for the loans. Expect loans with temporary buydowns to exhibit prepayment speeds similar to ARMs, according to an industry analyst.
Fees associated with MBS trades and other services provided by the Fixed Income Clearing Corp. increased Jan. 1. The FICC said the fee hike was necessary due to lower revenues and higher expenses.
Ginnie’s budget increases for FY 2023; Ginnie senior vice president found to have violated the Code of Federal Relations; Ginnie aligns eNote standards with GSEs; industry-driven FHA loss-mitigation proposals include some potential changes to Ginnie’s standards.
Final regulations implementing the Adjustable Interest Rate Act will go into effect next month, setting the stage for a smooth transition for the end of the London Inter-bank Offer Rate.
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