It’s a challenging rate environment, but market experts remain confident the PLS market will rebound this year once a rate plateau is reached and newer PLS deals backed by higher-rate loans flow into the market.
Loans that are coming to the PLS market now were originated back in November and December, when coupons were quite a bit lower than market coupons today. A ‘reset’ to a more normal market is coming, and soon.
Despite the global turmoil sparked by war in Ukraine and the volatility in interest rates that has followed, the MSR market remains on track to record one of its most dynamic runs in decades.
At least 25 transactions collateralized by more than 27,000 mortgages valued at $14.3 billion hit the market in January, based on an analysis of the flurry of bond-rating reports published over the month.
Many banks reported sharp declines in income from home loans during the second quarter. The large gains they enjoyed last year thanks to a surge in refinancing activity are unlikely to return, according to bankers and analysts.