Prepayment rates are expected to be higher than in previous refinance cycles because lenders have bumped up spending on technology to improve recapture rates and loan originators are eagerly anticipating increasing their volume.

"Current market conditions regarding pricing were excessive and restrictive," according to Sachem Capital.

Pending home sales declined by 2.1% on a monthly basis in May.

Some MSR buyers would rather focus on acquiring volume and leave the servicing duties to someone else. Subservicers are happy to provide the service, touting cost savings and innovations.

SoFi expects to see further growth in its share of mortgage originations due to the acquisition of Wyndham Capital Mortgage, which provided SoFi with mortgage fulfillment processes.

When interest rates decline, the prepayment environment for agency MBS is likely to be much different compared with previous refinance booms, according to industry participants.

There’s more demand for mortgage servicing rights than there is supply at the moment, helping to keep prices for the assets elevated. Even if MSR sales increase this year, prices are expected to remain firm.

Many large nonbank mortgage lenders increased production by double digits during the first quarter of 2024 while total originations were up only 3.2% from the fourth quarter. (Includes data table.)

Servicers face more onerous advance requirements for delinquent loans in Ginnie MBS compared with loans in GSE MBS.

New-home sales declined by 11.3% in May.