Q2 Home Equity Issuance Has Skyrocketed With Yields Exceeding 10%
Mortgage News July 17, 2023
During the second quarter, the dollar volume of securitized home-equity transactions nearly tripled compared to the previous three-month period. Furthermore, the average yield on deals closed this year has exceeded 10 percent.
Between April 1 and June 30, a total of six home-equity securitizations amounting to $1.308 billion were identified in a HELN analysis of rated residential mortgage-backed securities that were closed during that time frame.
HELN estimates that the aggregate loan count on transactions during the second quarter was approximately 16,087 units.
In the first quarter, HELN tracked two home-equity backed RMBS worth $0.437 billion, with approximately 5,217 loans. In the second half of last year, HELN identified three transactions totaling $0.637 billion that were securitized.
Based on an analysis of four reported transactions, the weighted-average gross coupon rate on the securitized product for the first half of this year was 10.54 percent..
The transactions that took place in the second quarter included:
- JPMMT 2023-HE1 consists of 2,269 second-lien home-equity lines of credit with an unpaid principal balance of $186.391 million. The combined credit lines, including unpaid principal, have a utilization rate of 83.1 percent, totaling $224.4 million.
- RCKT 2023-CES1 consists of 3,430 closed-end second mortgages with a combined unpaid principal balance of approximately $246.215 million. These loans have a two-month seasoning and were used for cash-out.
- FIGRE 2023-HE2 includes 2,783 fixed-rate HELOCs with an unpaid principal balance of $205.444 million. The total credit limit on these loans is $208.3 billion, with a utilization rate of 99.3 percent.
- The Saluda Grade Alternative Mortgage Trust 2023-SEQ3 comprises 2,587 newly originated residential second-lien mortgages totaling $232.7 million.
- NRMLT 2023-1 is supported by 1,215 loans totaling $200.35 million, as per Fitch Ratings.
- FIGRE Trust 2023-HE1 consists of 3,568 loans totaling $237 million, as stated by DBRS Morningstar.
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