MBS markets are the primary source of liquidity for many mortgage lenders, but are struggling so far in 2023. Investors have pulled back from the market due to increased scrutiny from regulators, lower investor demand and the tightened up mortgage lending process.

The outlook for the markets could get worse if investors press on with their withdrawal. This could lead to a lack of liquidity and put a strain on the ability of lenders to close or refinance mortgage loans. Market experts are divided as to the ultimate impact of the retreat. Some argue the decline could be minor while others point to a prolonged slump that might cause a liquidity crunch.

• Private-Label and Agency MBS Markets – Primary source of liquidity for mortgage lenders
• Regulatory scrutiny – Increased focus from regulators has led to pullback by investors
• Lower Investor Demand – Fewer buyers for MBS means lower liquidity for mortgage lenders
• Tightened Mortgage Lending Process – Difficult for lenders to close or refinance mortgage loans
• Uncertain Outlook – Experts divided on the impact of market slump, ranging from minor to long-term liquidity crunch

You can read this full article at: https://www.housingwire.com/articles/mbs-issuance-tumbled-in-q1-heres-how-the-rest-of-2023-is-shaping-up/(subscription required)

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