While investors in fix-and-flip and other business-purpose loans are taking a closer look at loan characteristics and lenders’ practices, lenders are adjusting and considering locking in longer-term financing.
In the secondary market, issuers have had to deal with diminished demand for mortgage products originated prior to the recent runup in interest rates. Is the worst behind the sector?
Most companies that issued non-agency MBS with GSE-eligible investment-property loans during the fourth quarter haven’t offered similar deals thus far in 2022.
Spreads on MBS involving non-qualified mortgages have widened due to rising interest rates and excess supply. However, demand is on the rise again as new buyers are entering the space.
Spreads on non-agency MBS issued early this year were wider than the pricing seen near the end of 2021. Industry participants witnessed volatility in the broader financial markets along with an increase in the supply of non-agency MBS.
Annaly Capital Management’s net income declined by nearly 20% from the third to the fourth quarter and AGNC Investment took a loss as agency MBS values fluctuated due to actions by the Federal Reserve.
Some investors in MBS and ABS are ready to discard data collected in the past two years due to distortions from actions by the federal government. One problem: projecting asset performance moving forward.