Has the mortgage-backed securities market, one of the only thriving sectors in the fixed-income marketplace this year, simply caught a cold, or is the ailment far more serious?

The question is a hotly debated one among mortgage players, as some said they still believe 2003 could be another powerhouse year for MBS issuance. At the same time, however, MBS underwriting volumes have dropped precipitously in each of the past four months. About $22.2 billion in MBS was underwritten in November, compared with $87.3 billion in the same month in 2001, according to a monthly data analysis by Thomson. That dip follows equally depressed performances for the previous two months. In October, MBS underwriting was $32.3 billion, down 38% from the same period last year, and in August, it was $28.0 billion, down 72% from the $48.3 billion in September 2001.

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