Ginnie Mae MBS issuance returns to year-ago levels

Issuance of mortgage-backed securities increased and came close to matching 2018 levels in the latest month tracked by Ginnie Mae.

New single-family and multifamily MBS in April totaled over $34 billion, down less than 1% from a year ago.

In comparison, March's issuance of more than $27 billion was almost 10% below what it was the previous year, February's issuance of nearly $25 billion was more than 26% lower than a year ago, and January's issuance of almost $30 billion was almost 17% lower year-to-year.

The total outstanding principal balance to Ginnie Mae securities in April grew to more than $2 trillion, up slightly from nearly $2 trillion a year ago and the previous month.

Issuance of securitized Home Equity Conversion Mortgages fell to $567 million, less than half of what it was in early 2018.

But securitized HECM volumes were unusually high at the beginning of last year, reflecting a rush to market ahead of a change to principal limit factors for loans that reduced originations.

"Reverse mortgage lenders face a new era of reduced volume, primarily due to the lower principal limit factors for Home Equity Conversion Mortgages in effect since the beginning of fiscal year 2018," Michael McCully and Joseph Kelly, consultants at New View Advisors, said in a report. "The HMBS market will be hard pressed to equal last year's totals."

Principal limit factors determine the amount of money borrowers can withdraw from their homes. Ginnie Mae, which insures HMBS, and the Federal Housing Administration, which insures HECMs, both have fiscal years that start Oct. 1 and end Sept. 30 of the following year.