Deliveries of rate-term refinances into agency MBS declined by almost 40% on a monthly basis in December.

New issuance was up in all the major food groups last year: residential MBS, commercial MBS and ABS. But overall quarterly volume slipped late in 2024.

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.