Banks continued to build their retained mortgage portfolios, but mostly with fixed-rate mortgages, while borrowing costs rose significantly. The agency MSR market is slowly shifting toward higher-coupon loans. (Includes three data charts.)

Operating income from servicing is stable; fluctuations in MSR valuations account for most of the ups and downs in the sector.

All three agencies saw rising business in May...

Jumbo lending held up relatively well in 2022 as interest rates increased. That trend ended in the first quarter of 2023.

Originations were down in the first quarter, but gain-on-sale margins improved. Having a hand in the servicing business helped some firms turn a profit.

Freddie posted the biggest monthly gains among the three agencies, although Ginnie was still the biggest issuer. Volume was up for both purchase and refinance business.

Both the non-agency jumbo market and high-balance agency production saw sharp declines during the first quarter of 2023. In a cooler housing market, buyers are looking for affordability. (Includes three data charts.)

With banks and the Fed shedding MBS, REITs added to their portfolios.

The purchase-mortgage share is growing as refinance business dwindles.

The Federal Reserve has been paring its massive agency MBS portfolio, and banks have been on the sideline. Cue a modest rebound in REIT investment in the sector in the first quarter. (Includes data chart.)