SFA Research Corner: High Rates Slow MBS’s Run; 2023 Brings Its Own Challenges

SFA’s Research Corner looks at the impact that slower originations, higher borrowing costs and stressed market liquidity has had on MBS. Agency and non-agency RMBS and CMBS ended 2022 at $2 trillion, half of 2021’s volume. While performance is currently benign (as shown by FNMA/FHLMC residential loan pools) or improving (FNMA/GNMA commercial loan pools), banks are preparing for a challenging 2023. The Fed’s latest Senior Loan Officer Opinion Survey reports that a “significant” net share of domestic banks have tightened standards for multifamily loans and a “moderate” or “modest” net share of banks have tightened standards for residential loans.