HMBS June 2021 Part II: Refi Wave Rolls On

Outstanding HMBS fell to just under $56.5 billion in June, as record HECM loan payoffs outpaced issuance. HMBS payoffs exceeded $1.1 billion, a dollar amount surpassed only by the assignment wave of 2018. For voluntary payments, including refinancings, June 2021 was a record month. Outstanding HMBS fell by about $50 million. The big payoff reflects continued high levels of refinancing, as low rates and high home prices allow more homeowners to borrow new, larger HECM loans.

February was the last month in which GNMA allowed issuance of HMBS pools backed by first participations of LIBOR-indexed loans. For the time being, the Treasury CMT index replaces LIBOR as the base index for newly originated adjustable-rate HECM loans.

For 2019, HMBS posted its lowest annual issuance total in five years. In 2020, low interest rates and a higher lending limit boosted production significantly to a near-record $10.6 billion. At the halfway mark in 2021, HMBS issuance totals $5.8 billion, on pace to exceed $11 billion.

Our friends at Recursion broke down the prepayment numbers further: last month’s 98% MCA mandatory purchases totaled $220 million, just 19.1% of the total.

New View Advisors compiled this data from publicly available Ginnie Mae data as well as private sources.

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