The 30-year fixed rate agency MBS market is expected to dip significantly in May. Analysts at JPMorgan Securities believe that the amount of outstanding 30-year agency MBS should decrease by well over $30 billion, based on gross production up until May 29.
Analysts said this would be the largest one-month decline on record. The same comment was made last month when the 30-year sector dipped by more than $28 billion, a record. The rise in paydowns in May/June, along with a sustained high share of refinancings down the curve, is accelerating the drop in outstanding 30-year MBS, the firm stated.