Issuance of non-agency securities remain steady despite dip
An increase in the issuance of expanded-credit mortgage-backed securities propped up a virtually flat non-agency MBS market during the first quarter, according to a new analysis released by the Inside Nonconforming Markets.
The issuance of non-agency securities backed by newly originated home loans dropped slightly quarter over quarter to $34.97 billion in Q1 2022.
Meanwhile, expanded-credit MBS issuance saw a 38.6% gain, up to $14.10 billion in the first quarter. Expanded-credit securities are backed by non-qualified mortgages and other non-jumbo and non-agency loan products.
“While expanded-credit MBS issuers faced lower profitability amid rising interest rates and reduced demand from investors, they piled into the market,” Inside Mortgage Finance noted in a report. “In some cases, investors changed deal terms to their advantage with originators having little in the way of bargaining power.”
Read more: Long Run Partners enters securitization market with first non-QM MBS deal
Last week, a new non-QM investor came into the securitization market with a $331.5 million MBS. The transaction, which received preliminary AAA ratings from Fitch, is collateralized by a pool of 525 non-prime mortgages that have seasoned for an average of five months.
In February, non-QM leader Angel Oak Mortgage issued a $537.6 million MBS backed by 1,138 non-QM loans. The deal marks Angel Oak’s eighth securitization since its IPO launch.
