MBS Issuance Off

Issuance of mortgage-related securities decreased to $406.7 in the first quarter from $410.2 billion in the previous quarter, according to the Bond Market Association’s Research Quarterly report. However, the total did rise from $403.0 billion a year earlier.

Issuance of mortgage-related securities “by government sponsored agencies, such as Fannie Mae and Freddie Mac, dropped 43.9 percent in the quarter, as the level of refinancing activity continued to be significantly below the record breaking years of 2002 and 2003 and as the agencies focus on implementing capital and portfolio management strategies,” the association said in an announcement.

Total agency issuance of mortgage-backed securities totaled $198.9 billion, down 7.9% from the fourth quarter and a whopping 21.6 percent below the same period last year, the report said. Ginnie Mae led the year-over-year decline, off 36%, followed by Fannie, down 22%. Freddie’s MBS issuance decreased 15%.

Agency issuance of collateralized mortgage obligations, however, improved both on a quarterly and annual basis to $93.2 billion, the trade group noted.

“With the GSEs focused on managing capital, growth and mortgage-related portfolios within the current regulatory and business environment, private sector non-agency issuers” have taken care of expanding MBS issuance over the past year — with private-label MBS surging 72.1 percent from the first quarter a year ago to $114.6 billion, according to the report.

The group also reported that the yearly increase in overall asset-backed securities was “aided by the strength of the home equity loan sector.” HEL issuance increased 7.5% from the first quarter of last year to $95.8 billion.

HEL supply was “well absorbed by investors looking for higher credit quality and shorter duration securities,” according to the report. “However, there are signs of slower growth in the sector, as the first quarter of the year marked the second straight quarter in which issuance decrease.”