As interest rates increase, the value of outstanding expanded-credit MBS declines. Investors are responding by demanding higher spreads for new issuance, putting pressure on issuers.

In a high-rate environment, debt service coverage ratios determine the size of an agency refinance. Those loans may not be large enough to cover the inflation-driven debt of many multifamily properties.

Interest rates on mortgages increased steadily throughout the second quarter, diminishing demand among non-agency MBS investors to some extent. (Includes data table.)

A working group at the National Association of Insurance Commissioners proposed harsh treatment of multi-collateral structured credit investments at insurance companies.

Mortgage industry analysts ponder the impact of new Fannie Mae and Freddie Mac disclosures on the MBS and credit-risk transfer markets.

SFA and other trade groups are seeking major changes to the re-proposed bank capital requirements. MBA raised concerns that non-agency MBS would receive more favorable capital treatment than GSE MBS.

Investors see expanded-credit MBS as a safer bet than consumer ABS and CLO deals.

The yield curve is helping to drive up demand for non-agency MBS. And rising delinquencies aren’t much of a concern for investors.

Investors aren’t tiering issuers/deals, fraud is a risk with cash-out DSCR mortgages, jumbos in expanded-credit MBS prepay faster than traditional expanded-credit mortgages and investors are getting aggressive with bids for GSE-eligible mortgages.

Sylvain Raynes, the new lead of the structured finance practice at Egan-Jones Ratings Company, warned that MBS and ABS investors are losing money if they’re relying on fairly static ratings from other firms.