U.S. RMBS issuance increased significantly in 2024 amid a steady fed funds rate that finally began falling in 2024, reaching below 5% in October. A nearly 75% year-over-year (YoY) increase in issuance illustrates the stark contrast between the strength of the RMBS market in 2024 relative to 2023. Mortgage rates fluctuated throughout 2024, settling at 6.79% as of November 7, which modestly boosted mortgage volumes, including refinancing activity. The relative rate stability throughout the year—particularly the first three quarters—allowed RMBS spreads to tighten, showing considerable improvement that has largely persisted as we approach year-end.
Notably, home prices have remained remarkably resilient on a national level. A sharp decline in home prices seems unlikely, given the persistent housing shortage and low unemployment rates, which generally support a favorable environment for RMBS issuance. We expect RMBS 2.01 issuance in 2025 to reach $107…