The gain in November agency MBS issuance came from another rise in rate-term refinance securitization. United Wholesale Mortgage, Rocket and Pennymac remained the top three agency sellers despite declines in monthly volume. (Includes two data tables.)
Federal Reserve Ends Balance Sheet ReductionAfter 42 straight months of allowing its security holdings to run off, the Federal Reserve finally said “enough.” The central bank’s current balance sheet: $6.134 trillion.
Federal banking regulators issued a final rule to adjust the enhanced supplementary leverage ratio that applies to large banks. The directive aims to increase bank investments in low-risk assets, including Ginnie Mae MBS.
Bill Ackman’s plan calls for Treasury to forgive its senior preferred shares, a strategy that some industry observers say would be politically risky for President Trump.
The Fed established the Bank Term Funding Program to help alleviate pressure faced by depository institutions holding MBS and other assets with large unrealized losses. Tracking usage of the BTFP in real-time was limited.
Securities industry stakeholders say preservation of the secondary mortgage market, especially MBS futures trading on the TBA market, is essential to keeping mortgage rates low.
Vista Index Services plans to release an index next month that will give investors an opportunity to hedge against delinquency risks in Ginnie MBS, rather than selling securities if there’s a downturn.
The agency market is responding to the decline in mortgage rates since early September with rate-term refinance business doubling in October. ARMs and 15-year loans are also surging. (Includes two data tables.)
The Fed’s shift to rate cuts is helping to increase demand for agency MBS. And other activity at the federal level has prompted a reduction in volatility, providing stability for investors.
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