MSR investors continue to offer strong bids for both low-coupon and current-coupon assets. Some MSR owners are also adjusting their risk tolerance as volatility in the financial markets has been constant during the Trump administration.

Typically, when interest rates decline, as they did for much of the first quarter, retention rates increase. That wasn’t the case this time.

Federal bank regulators are looking to reduce the capital requirements that apply to mortgage servicing rights and to mortgages held in portfolio. A March proposal is seen as making mortgage lending and servicing somewhat more attractive for banks.