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MBS Issuance to Reach $1.67 Trillion

MBS Issuance to Reach $1.67 Trillion

Bond Market Association releases Q3 report

November 27, 2002

By MortgageDaily.com staff

Issuance of mortgage-backed securities (MBS) should break last year’s record of $1.67 trillion, the Bond Market Association reported in its Research Quarterly newsletter.

New issue volume totaled $532.1 billion during the third quarter, a 15.7% increase from second quarter’s $459.7 billion. It’s also a 21% jump from third quarter 2001’s issuance of $439.7 billion.

For the first three quarters this year, MBS issuance totaled $1.54 trillion. That year-to-date (YTD) figure is almost 40% more volume than the $1.1 trillion issued during the same time last year.

High refinancing and origination activity, fueled by low interest rates, has been the increase’s major factor, the report said.

All components of MBS contributed to the enlarged figures.

Private-label issuance increased to $90.3 billion during the third quarter, a 61% increase from the same time last year. That’s also a 30.5% increase from second quarter 2002. YTD issuance totaled $218.4 billion.

Agency MBS volume took a step up last quarter with $313.5 billion, up 13% from the second quarter. The figure is also a 3.8% increase from third quarter 2001. The first three quarters of agency MBS issuance for 2002 totaled $951.1 billion. Broken down, Fannie Mae’s YTD increased 28.8% to $471.6 billion; Freddie Mac’s increased 30.7% to $351 billion; but Ginnie Mae’s YTD issuance only grew to $128.5 billion, a 1.2% increase.

The biggest increase came from agency collateralized mortgage obligation (CMO) issuance — its YTD surged 90% to $369.3 billion, compared with last year’s $193 billion. Ginnie more than doubled its CMO issuance to $50.6 billion, with Fannie and Freddie almost doubling theirs.

Daily trading volume in agency MBS by primary dealers averaged $145.4 billion during the first three quarters of 2002, an almost 40% increase from the same time last year, the report said.

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