Many top-tier sellers in the agency single-family market recorded massive increases in sales of rate-term refinances in the fourth quarter — but the refi market cratered in December.

The big gains came in high-LTV refinances, which surged to 13.6% of the sample, a 7.05 percentage point increase.

Bank holding company trading accounts saw a 3.9% increase in total residential MBS holdings in the third quarter.

The jump in refinance business, and a shift from cash-out to rate-term transactions, changed the credit-risk profile for Fannie and Freddie in the fourth quarter.

Agency pass-through MBS remain the most popular asset in bank holding company trading accounts, but there was a sharp increase in agency multifamily securities during the third quarter.

Depository institutions added some $68.55 billion of single-family MBS to their holdings during the third quarter.

The fastest-growing sectors of the MBS market in the third quarter were Ginnie Mae and the non-agency market. Banks, foreign investors, money managers and insurance companies easily offset the slow decline in the Fed’s portfolio. (Includes two data tables.)

A group of 16 mortgage REITs held $196.29 billion of residential MBS on their books at the end of September.

Much of the decline was the result of a change in how Freddie Mac classifies loans subject to a repurchase claim for which the seller has provided a remedy.

Freddie repurchases dropped in the third quarter as the GSE changed how it classifies loans with defects that have been cured by the seller. Withdrawn buyback claims were up. (Includes three data tables.)