Analysis of HECM Volume and HMBS Issuance Trends in May 2024
In the world of Home Equity Conversion Mortgages (HECM) and Home Equity Mortgage-Backed Securities (HMBS), the numbers are always changing and evolving. The latest reports from RMI and New View Advisors shed light on the current state of the industry, with some interesting trends emerging.
HECM volume has seen a notable spike in endorsement growth this year, which is certainly encouraging for the industry. However, the flatness of April’s case number assignments could potentially result in a volume slowdown in the coming months. RMI President John Lunde emphasizes the importance of looking at the bigger picture and not getting too caught up in monthly fluctuations. He attributes the steady growth to originators focusing on sustainable strategies, despite challenges in the rate environment.
While overall cases issued have dipped slightly, there has been an increase in HECM-to-HECM refinances, indicating opportunities for loan officers and borrowers to capitalize on favorable market conditions. The Southeast region has also seen a rise in activity, overtaking the Pacific region for the month. Lunde suggests that originators should pay attention to these shifts and adjust their sales and marketing strategies accordingly.
On the HMBS front, issuance levels remain historically low, with no expectation of reaching the records set in 2022. However, there has been some improvement in liquidity, thanks to tightened spreads and increased investor interest. Michael McCully of New View Advisors points to factors like Ginnie Mae HMBS 2.0 and the expectation of peaking rates as contributors to this positive trend.
Ultimately, both HECM and HMBS performance are closely tied to interest rates, with rate movements playing a significant role in issuance and volume levels. Policy changes by Ginnie Mae have helped improve liquidity, particularly for smaller pools, which can lower financing costs for issuers with large HMBS portfolios.
As we move forward into the summer months, the industry will be keeping a close eye on case numbers and rate movements to gauge future growth and performance. While there are challenges ahead, there are also opportunities for savvy originators to navigate the changing landscape and capitalize on emerging trends. Stay tuned for more updates on the dynamic world of HECM and HMBS.
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