Investors continued rotating into MBS as an alternative to increasingly expensive corporate debt, especially with tech firms gearing up for another wave of bond issuance to fund AI infrastructure. With investment-grade supply projected to top $800 billion in 2026, mortgage bonds look comparatively attractive, and analysts expect the sector to post its best returns in twenty years. These demand dynamics, combined with stable issuance, kept spreads firm even as global rate volatility picked up. U.S. yields spent the week locked in a narrow range (10-year Treasuries hovered between 4.00–4.15 percent) as investors waited for next week’s pivotal Fed meeting.
Ginnie Mae’s latest (September–October) update reinforced that government-backed production remains a pillar of mortgage liquidity. Its MBS portfolio inched from $2.83 trillion to $2.84 trillion on the back of $97 billion in two-month issuance and $23.1 billion in net growth. Both months saw robust pooling activity, supporting more than 286,000 households (including over 126,000 first-time buyers) and marking continued strength across Ginnie Mae II production and multifamily lending. This coincides with a broader November resurgence in mortgage supply: gross issuance hit $122.7 billion, the highest since 2022, driven entirely by refinances, with Ginnie Mae’s share climbing above 42 percent.
Weak ADP data, moderating inflation, and mixed labor signals kept expectations firmly in place for a 25-basis point cut next week, even as jobless claims touched a two-year low and Challenger reported elevated layoffs in tech and communications. Global rate pressures were mostly a sideshow, despite a sharp jump in Japanese government bond yields and speculation about future tightening from the Reserve Bank of Australia. Markets increasingly agree that the next meaningful move in yields will come from the Fed’s tone and updated projections rather than incoming data.
For borrowers, the environment delivered some incremental good news: mortgage rates fell for a second consecutive week. Freddie Mac reported declines to 6.19 percent on the 30-year and 5.44 percent on the 15-year, bringing both within a few basis points of year-to-date lows. Builders continued offering hefty incentives rather than cutting sticker prices: D.R. Horton advertising a 3.99 percent mortgage and Lennar providing average concessions of $64,000 per home. Housing data showed a cooling but orderly price environment, with nearly every state experiencing deceleration. For MBS investors, this normalization may actually prove helpful by stabilizing loan sizes and improving convexity, trends already reflected in recent agency purchase loan data.
The industry also saw continued strategic consolidation. 2025 M&A volumes exceeded 40 deals, more than the prior two years combined, and activity is expected to stay strong into 2026. The marquee example was Guild’s acquisition of Bayview’s retail platform, a merger between two strong operators rather than a distressed-seller story. Guild capped the quarter with $47 million in adjusted net income, its best production levels since 2021, and a servicing portfolio surpassing $100 billion. Taken together, the mortgage industry is benefiting from renewed investor demand, improving rate dynamics, and proactive corporate positioning, all while awaiting the Fed’s next policy reset.