The total amount of outstanding HECM mortgage-backed securities (HMBS) tallied $52.35 billion in September. Though this represents a slight gain from the previous month’s total, just how long total outstanding HMBS will rise is the question posed by New View Advisors in its latest commentary.
September’s tally is slightly higher than the $52.21 billion outstanding HMBS in August, according to the commentary New View Advisors compiled from publicly available Ginnie Mae data as well as private sources.
New View Advisors estimates the increase is composed of approximately $161 million in negative amortization, plus $680 million in new HMBS issuance, minus about $701 million in payoffs.
“Total outstanding HMBS has been increasing each month, but at a slower and slower rate, totaling only about $140 million in September,” New View Advisors writes in its commentary.
Meanwhile, New View Advisors notes that seasoned HMBS has paid off at over a 13% rate over the last 12 months—the highest annual rate since the introduction of HMBS. However, some shrinkage may be in store for outstanding HMBS over the next several months.
“With payoff amounts at record highs, total HMBS outstanding could shrink for the first time during the next three to four months,” writes New View Advisors.
Access the New View Advisors commentary.
Written by Jason Oliva