Investors can’t seem to get enough non-agency MBS. Issuance is booming and demand is expected to remain elevated thanks to the outlook for interest rates, among other factors.
Rocket’s originations and secondary market sales of home equity loans are flourishing without the GSEs. It’s also not yet clear how large of a role the GSEs would have in the market for closed-end second liens.
Securitization of home equity loans increased again in the first quarter, driven by closed-end second liens. Issuance is growing exponentially, helped by nonbanks and investor demand. (Includes two data tables.)
Banks are reducing their appetite for mortgages, providing opportunities for nonbanks to boost their investment in the mortgage market. Redwood Trust looks to be leading the way in terms of bank partnerships.
The Structured Finance Association, which is developing a compliance tool to facilitate uniformity in the non-agency MBS market on QM standards, has run into a vexing issue regarding the definition of a QM.
Regulators are pushing higher capital requirements on banks and looking favorably at credit-risk transfer transactions, helping to increase CRT issuance. Investor demand for bank CRT is also outstripping supply.