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Feb 2022

Agency MBS Update - Wordle of the Day: TAPER

For full-year 2021, Agency MBS gross issuance was a record $3.5 trillion, a 9% year-over-year (YoY) increase, and net issuance was $880 billion. Low mortgage rates and strong home price appreciation (HPA) contributed to record-high purchase and refinancing (refi) activity by homeowners.

Mortgage rates neared historic lows at the beginning of 2021, and in the first quarter of the year, the Agency constant prepayment rate (CPR) hit its highest level in the post-Global Financial Crisis (GFC) era. Although the Agency CPR in January remained marginally elevated relative to recent history, prepayment speeds have steadily trended lower since last March, as the 30-year mortgage rate has increased 120 basis points (bps) from its all-time low of 2.85% on Dec. 11, 2020, to 4.05% on Feb. 11, 2022.