Rising MBS supply has been worrisome for the market, especially in light of the uncertain demand for the product. However, experts still believe that there is sufficient demand for the supply to be absorbed.
In a recent report, JPMorgan Securities analysts noted that the numbers show there is still enough mortgage demand to match the increased supply. For one thing, even though monthly 30-year agency net issuance has increased to around $30 billion from $20 billion to $25 billion last year, 15-year issuance has actually dipped. Analysts calculated that the drop leaves only approximately $25 billion that needs to be absorbed.