Ginnie Mae MBS issuance drops for third straight month

Monthly volume for new issuances of Ginnie Mae mortgage-backed securities declined for the third straight month after reaching a two-year peak last fall.

The guarantor of government-backed loans reported $33.8 billion in MBS issued in February, off from $39.4 billion a month earlier. On a year over year basis, though, volume increased from $30.8 billion in February 2024. Last November, the dollar total of Ginnie Mae's issuances hit a more-than-two-year high when it reached $49.4 billion. 

The pooling and securitization of loans included transactions from more than 101,000 homeowners, including 45,000 first-time buyers. Thus far this year, over 100,000 loans for first-time home buyers have been pooled and securitized in issuances, Ginnie Mae said.

Included in February's numbers was $470 million worth of Home Equity Conversion Mortgages after Ginnie Mae finalized policies surrounding reverse-mortgage buyout relief that had broad industry backing at the end of last year. The reverse loans are issued by the Federal Housing Administration, but February issuance volume was at its lowest since last summer.

In total, Ginnie Mae's MBS portfolio outstanding increased to $2.73 trillion in February, with net growth of $11.7 billion over the month. Recent servicing data showed certain segments of borrowers of government-backed loans encountering elevated distress this year.

Mortgage rates fell throughout February amid ongoing economic uncertainty in the first weeks of the new Trump administration. The decline in rates led to a brief surge in refinance transactions during the month, with their share at almost 44% of all originations in the last week of February, according to the Mortgage Bankers Association. 

The recent pullback in issuances occurs at the same time the Federal Reserve started its latest round of interest rate cuts, which have been reduced 75 basis points since November. The central bank, though, paused the pace of reductions in its two 2025 meetings thus far. 

In a press conference following the Federal Open Market Committee's most recent gathering this week, Fed Chair Jerome Powell also signaled he wanted the bank to continue shedding the amount of mortgage-backed securities on its balance sheet. Monthly runoff of MBS is currently capped at a pace of $35 million per month. 

In new commentary also published this week by Morningstar DBRS, total deal pricings of all residential mortgage-backed securities surpassed $9 billion in the first few weeks of March, according to data from Finsight. The number comprised a range of residential loan types, including non-QM, investor and closed-end seconds. 

Among MBS deals to come this month is a $392.9 million transaction from Rocket Mortgage, which will sell to investors through eight tranches of notes.