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.

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.

Commercial banks and the Federal Reserve pulled back from the MBS market in the third quarter, but the supply of outstanding securities continued to grow. Money-market funds and other investors appear to be picking up some of the slack. (Includes two data charts.)

Investors appear increasingly reluctant to sell their credit-risk transfer notes back to the enterprises at the prices Fannie and Freddie are offering.

Despite rising rates and volatility, mortgage REITs reported a small gain in their retained agency MBS holdings. The industry’s aggregate TBA position was lower, as was non-agency MBS investment. (Includes data chart.)

Freddie Mac issued 84 green single-family mortgage-backed securities in 2021 that save 192,168 million BTUs of energy per year.

A market-wide slump in MBS fair market values accounted for most of the decline in reported bank holdings of these securities during the third quarter. And there was a significant increase in MBS held in bank trading accounts. (Includes two data charts.)

Secondary market loan pricing depends on market timeframes, roles, pull structures and other esoteric economic components.

Uncertainty regarding future actions by the Federal Reserve has dampened investor demand for MBS and ABS. The outlook, too, is negative.