Issuance of expanded-credit mortgage-backed securities declined during the fourth quarter of 2025, marking the first quarterly decline in issuance for the sector in two years. (Includes three data tables.)

Lower interest rates and potential policy changes are expected to help drive an increase in prepayment activity this year.

A change in how MBS deals are rated led to more than 1,000 upgrades for tranches of deals backed by HELs and seasoned mortgages.

Growing acceptance of DSCR loans is helping drive improved lending flexibility.

President Trump’s announcement that the GSEs will buy $200 billion of agency MBS prompted mortgage spreads to tighten by about 20 basis points and some lenders to offer mortgages below 6.00%.

The securitization rate for residential mortgages originated during the third quarter was near the same level seen in 2019. Meanwhile, the share of GSE-eligible mortgages that flowed into MBS increased.

A push by the Securities and Exchange Commission to revise disclosure standards for publicly-registered non-agency MBS has broad support.

Some 36.5% of the mortgages in a new $365.0 million non-agency MBS from Citi have private mortgage insurance and were eligible for delivery to Fannie Mae and Freddie Mac.

Some large lenders are seeing their cash-window availability capped or being cut off altogether, according to trading advisors. Communications from the GSEs and FHFA on the matter are vague.

Interest rate cuts by the Federal Reserve look likely to help maintain investor demand for ABS in 2026.