Jumbo

June was a rough month for jumbo-mortgage securitizations, with only two private-label offerings brought to market valued at roughly $821 million.

For the final week of June, the rate for a 30-year fixed mortgage was in the 5.7% range. Volume dropped off considerably in the second quarter, as rates continued to rise, to 44 deals valued at $18.9 billion, according to KBRA data, “To put it into perspective, RMBS issuance in June 2022 [based on MAXEX’s deal tracking] totaled less than $900 million, versus the June 2021 total of nearly $5 billion.” “Just two [jumbo-securitization] deals priced in June, compared to three in May,” the MAXEX report states. In both cases, the most recent coupon figures fall well short of current market rates for 30-year fixed mortgages. That average coupon has been creeping up as the year moves forward for securitization deals sponsored by both lenders, according to bond-rating reports for each, but it is being outpaced by fast-rising market rates — propelled by the Federal Reserve’s monetary tightening policies in its battle against inflation. That has created a distortion in execution and pricing in the secondary mortgage market. The two jumbo-loan deals to make it out of the gate last month were issued by Rocket Mortgage and J.P. Morgan Chase via the Rocket Mortgage Trust and J.P. Morgan Mortgage Trust conduits. J.P. Morgan has been far more active this year, with nine prime-jumbo offerings through the end of June valued at $7.8 billion — two involving high loan-to-value prime jumbo-loan pools. Ahead of its June offering, Rocket already had sponsored three prime jumbo securitizations this year, backed by mortgages valued around $1.9 billion. For Rocket, according to KBRA’s bond-rating reports, the average coupon on its jumbo offerings has risen from 3.02% to 3.91% between its first jumbo transaction in January to its most recent deal in June. For J.P. Morgan, according to a bond-rating report from Fitch Ratings, the average weighted coupon for the jumbo loan pools in its offerings has increased from 3.3% in April — prior comparable data was unavailable in the report — to 3.8% in its most recent offering in June. The Rocket prime jumbo deal was backed by mortgages valued at $337.9 million and the J.P. Morgan deal was collateralized by jumbo mortgages valued at $483.4 million.