MSRs and Rising Rates

Mortgage rates fell like a rock in Q4, that is, until early December. Now lenders (and consumers) are facing a benchmark 10-year Treasury that on Thursday morning was yielding north of 3.5%. Still, it should be pointed out that servicing balances at yearend were strong (according to preliminary 4Q figures compiled by National Mortgage News' Quarterly Data Report) with many firms reporting gains in their receivables. Also, some servicers (PHH Mortgage, for instance) marked up the value of their MSRs as rates began to rise throughout December. What does all this mean? It's hard to say. Rising rates will crimp the refi business, for sure, but we're hearing more stories about homebuyers who are finally coming off the fence because they fear an even further hike in rates…