According to a research report put out recently by the Bond Market Association, agency mortgage pass-through volume remained strong in the first half of 1999, with issuance totaling $420.3 billion in the period, a 30% increase over the $324.2 billion issued in the comparable period in 1998.
The current growth in MBS issuance is a result of a healthy economy combined with a strong housing market, the report stated.
Although the rate on the Mortgage Bankers Association 30-year fixed-rate mortgage index rose above 7% for the first time in over a year, mortgage originations remained at healthy levels, totaling a record $760 billion in the first half of 1999, the report said.
Additionally, all three government-sponsored enterprises continued to step up their participation in the new issue mortgage-backed security market, with double-digit gains in issuance reported by all three agencies for the first half of this year.
Fannie Mae led the way, with $185 billion in issuance in the first half of the year, a 30% increase over the $142.1 billion sold in the year-ago period. Issuance by Freddie Mac rose 34%, to $152.2 billion, as compared with the $113.2 billion issued in the same period last year. Ginnie Mae, meanwhile, reported a 21% increase over last year's levels, with issuance totaling $83.1 billion in the first half of this year, up from the $68.8 billion sold in the first half of 1998.
Agency collateralized mortgage obligation issuance managed a 5% gain over 1998 levels despite a sharp reduction in issuance by Fannie Mae, the report said.
CMO issuance totaled $127.5 billion in the first half of 1999, compared with the $121.4 billion total reported in the first half of 1998. As has been the case throughout 1999, the gain was due solely to the presence of Freddie Mac, which accounted for over 67% of total CMO issuance in the first-half period. Freddie Mac reported a 20 % increase over 1998, with issuance totaling $85.2 billion in the first half of 1999, compared with the $70.7 billion issued last year.
Trading in mortgage-related securities remained lively in the first half of this year, with daily trading volume averaging $73.7 billion in the period, a 10% increase over the $67.1 billion average reported for the first half of last year.
The increased level of trading is a result of several factors, the report said, including both the strong new issue supply and healthy demand for mortgage-related products.
The data include trading of mortgage-related securities between primary dealers, brokers and their customers, as reported by the Federal Reserve Bank of New York.