Rising Interest Rates May Support Growth in RMBS Market in 2017

According to a recent article in HousingWire, some see rising interest rates as a reason to be hopeful that private label RMBS issuance will increase in 2017. The article cites a report from DBRS, explaining that "higher rates facilitate the return of securitization economics and may incentivize certain banks to unload the fixed-rate mortgages in their portfolios."

Additionally, the conclusions of the report suggest that as a result of higher interest rates, lenders could look to extend more non-qualified mortgage loans leading to an increase in private RMBS deals. However, the report also predicts that given the challenges presented by an overhaul of Fannie and Freddie, the GSEs will likely maintain their current role in the market. If so, there remains a limit as to how much private label RMBS issuance can ultimately increase.

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