The Fed rate cut? The odds presently focus on a 25-basis-point trim on the short end of the stick.

The volume of adjustable-rate mortgages flowing into agency mortgage-backed securities jumped in the second quarter of 2025 and has remained elevated. Large nonbank lenders are driving the increase. (Includes data table.)

The retail channel accounted for 51.3% of first-lien originations in the second quarter of 2025.

"The backdrop for investors owning agency mortgages feels a lot more supportive," said Jay Bacow, co-head of securitized products research at Morgan Stanley.

PRMI is a portfolio manager founded in 2019 with ties to Merchants Bank of Indiana.

The average interest rate on a 30-year fixed-rate mortgage declined by 15 basis points in the past week.

With the Fed widely expected to reduce the federal funds rate next week, demand for agency MBS is rising. Banks are also projected to add to their holdings, though their buying might be somewhat delayed.

The retail share of first-lien originations bounced back above 50% in the second quarter. Still, in the first half of the year, third-party originations increased at a faster pace on an annual basis than retail lending. (Includes six data tables.)

Many efforts started during the Biden administration won’t move forward. But servicing reforms are still in the works at the CFPB. And the bureau is considering major changes to LO comp.

There’s speculation that the Trump administration will direct the GSEs to increase purchases of agency MBS, potentially as part of a declaration of a housing emergency. The move could help reduce mortgage rates.