MCT's Update for the Current MSR Market

By Danielle Dvorchak posted 04-05-2023 14:42


Mortgage rates and most indices remained volatile during March. However, mortgage rates managed to close the month at the same level as of 2/28, while float income rates declined by about 39 bps by 3/31.  Mortgage production remained weak during March, however, second mortgage and HELOC loan production both increased during the same period.
Market values for existing MSR portfolios also remained relatively flat during March. Bulk MSR market values have finally edged higher during February and March and are closing the gap with portfolios’ Fair Values. This was a significant shift after weakness in the MSR bulk market during Q4, 2022. Current market values are now within approximately 5 bps of Fair Values.
As of March 31, 2023, the current 30 Year base mortgage rate is 6.4720%, which represents about a one (1) bps decline from the February 28th mark. We anticipate that existing portfolio fair values will remain unchanged or slightly lower from their 2/28/2023 marks in the range of about 1-2 basis points, depending on underlying portfolio characteristics.
For portfolios that have a mix of Conventional and Government loans, we anticipate Fair Value changes as follows:

  • Conventional loans between -1 to +2 bps change from February 28, 2023 marks.
  • Government loans between -1 to +2 bps change from February 28, 2023 marks.
    • GNMA loans are experiencing a continuous uptick in delinquency rates which generally began in Q2, 2022.  Due to the continuous increase in delinquencies, we are currently more cautious with our GNMA fair value estimates.

      Contact the MCT MSR Team for any questions!