Rate Outlook Reversal Drives Changes in MSR Values

MSR valuations on newly originated loans continued to trend modestly upward, supported by a slight slowdown in prepayment activity on current-coupon mortgages. While discount rates have edged higher, the impact has been largely offset by reduced prepay speeds, helping to stabilize overall valuations.

Market sentiment has also shifted meaningfully in recent weeks. There is now a growing expectation that interest rates may continue to rise, reversing last month’s prevailing outlook. This change in rate expectations is beginning to influence both pricing dynamics and forward-looking MSR assumptions. 

Our team is watching these shifts carefully. Stay tuned as we keep a close eye on MSR valuations and rate trends.