Morgan Stanley: 90.6% of MBS Refinanceable

If you think the refinancing boom is close to being over, think again. A new report issued by Morgan Stanley & Co. says that 90.6% of outstanding mortgage-backed securities ($2.5 trillion) are refinanceable.In an interview with MortgageWire Nov. 11, Morgan analyst Ken Posner said he thinks the industry could produce $2 trillion in loans next year. Morgan Stanley bases its refi estimate "on the assumption that current spreads between mortgage rates and 10-year Treasuries are 200 bps and that mortgage rates are 50 bps above MBS coupons," the report says. "The size of the refi market will depend on how long rates stay at these levels." Mr. Posner made it clear that his refi estimate applies to MBS and not necessarily all outstanding mortgage debt, which, according to the Quarterly Data Report, totals about $6.1 trillion. Morgan Stanley says in its report, "Though it may look like cash-out refis dropped from Q2, that is not the case... The incentive to take cash out may increase as mortgage rates level off."