Mortgage

Ginnie Mae MBS emissions plateaus close to file highs in November

Mortgage-backed securities issuance, insured by Ginnie Mae, declined to $ 76.2 billion in November, but remained close to its August high of $ 77.62 billion.

Ginnie Mae's issuance was $ 76.4 billion in October, compared with just over $ 56 billion a year ago.

"Historically low interest rates continue to drive home purchases and mortgage refinancing," said Eric Blankenstein, executive vice president of Ginnie Mae, in a press release. "As a new year begins, investors and issuers can rest assured that Ginnie Mae is focused on meeting the diverse product needs of investors and issuers who bring capital to millions of families each year."

The recent plateau could reflect a combination of a seasonal slowdown, more cautious underwriting amid the pandemic, and a relative decline in Federal Housing Administration insurance coverage, which tends to be seen in a refinancing boom.

Although lower interest rates generate strong interest in all types of loans, the discounts available in the government-sponsored corporate market are generally more beneficial to qualified borrowers than the FHA market. FHA-insured loans make up a large part of Ginnie Mae's collateral.

Whether Ginnie emissions will increase in the future may depend in part on how much the Biden government wants to use the FHA to promote affordable housing and home ownership. The Biden administration is expected to be more proactive than the Trump administration in regulating, enforcing and promoting first-time buyer programs.

The growth in emissions may also depend on the willingness of lenders to lend under the FHA program, which large banks have largely avoided since the Great Recession due to compliance obligations that emerged after the housing crash.

During the record-breaking fiscal year that ended September 30, Ginnie helped fund the second highest number of first-time buyers in its history. This emerges from a corporate post written last month by outgoing Executive Vice President Seth Appleton. (Appleton recently left Ginnie to serve as president of the Organization to Maintain Standards in the Mortgage Industry.)

Ginnie helped fund 965,115 first-time buyers in FY 2020, nearing the peak of 975,340 in FY 2017, and far surpassing the 888,438 it supported in FY 2019. The FHA was the largest contributor to that number with more than 636,000 mortgages.

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