Through the end of Q3 2015, the total of U.S. prime jumbo residential mortgage-backed securities (RMBS) issued has already passed the 2014 total, according to a report from Fitch Ratings.
Although the third quarter of 2015 only saw seven RMBS transactions from six issuers, a continued decline from 12 transactions in the first quarter and 10 transactions in the second quarter, the 29 transactions and approximately $10.1 billion of issuance so far this year have already exceeded the 26 transactions and $8.3 billion issued for the entire year of 2014.
"The increased transaction volume reflects a broadening of the number of issuers active in the market," the report said. "Eight different issuers have issued prime jumbo RMBS through third quarter 2015, compared to seven issuers in all of 2014."
"Prepay speeds may continue to decline as the proportion of loans with refinance incentive declines, especially as the Fed considers raising rates late this year or in early 2016," the report explained.
In July, Fitch had already predicted that RMBS issuance was set to exceed last year’s levels thanks to a strong second quarter of RMBS issuance, according to Fitch Ratings’ quarterly U.S. Prime Jumbo RMBS Trends report.
The Fitch report notes that eight jumbo RMBS deals came to market in second-quarter 2015 from six issuers. Although this number is slightly lower than the 12 RMBS deals from seven issuers that were brought to market in the first quarter of 2015, the amount of new transactions only added to an already strong first half of the year.
According to Fitch, the $7.1 billion worth of RMBS issuance thus far in 2015 is on track to surpass not only the 2014 total of $8.3 billion, but also the 2013 total of $13.1 billion.
“The slowly increasing pace of new RMBS issuance reflects more issuers willing to tap the market,” said Fitch Director Sean Nelson.
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