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As of February 28, the average 30-year primary fixed mortgage rate was just above 6%, but lower than the prior month by about nine (9) basis points. Mortgage rates have been trending lower since November 2025. February’s lending data reflected some positive signs as more borrowers opted to take advantage of the opportunity to refinance their existing loans.
During the same period, MCT’s Base Mortgage Rate declined from 6.10% to 6.01% at the end of February, representing about a nine (9) basis point decline since January 31, 2026, and a 63 basis point decline since February 28, 2025. The Mortgage Bankers Association and Fannie Mae continue to project that rates will drop below 6.00% by the end of 2026.
MSR fair values remained robust during the month of February and showed little impact from current mortgage and float income rate volatility. Aggregators have also kept MSR market values elevated since the start of 2026.
Fast forward to March 20, 2026, global political and economic turmoil have upended all positive indicators the financial markets had started the year with. Consequently, the Treasury yield curve is flattening, and mortgage rates have risen by at least 30 basis points dragging refinance volume downward. The current 30-year primary fixed mortgage rate rose by over 30 basis points to 6.34% from February 28th low of 6.01%.
Oil prices have also skyrocketed by over 30% since February, which could lead to significant global economic ramifications. The Federal Reserve naturally does not control foreign policy and has limited options to manage inflation and employment. The current global crisis isn’t just raising prices; it is also slowing economic growth around the globe. According to Ethan Harris, an economist and FED watcher, indicated that the “energy price shock adds a lot to Fed policy uncertainty”.
Wholesale prices rose sharply in February while job growth slowed down. As a result, the Federal Reserve announced that they will hold rates steady for the near future due to global economic and political uncertainty.
New Production and Value Trends:
February experienced a significant surge In refinancing activities buoyed by lower interest rates. However, that positive trend reversed sharply with the reversal of mortgage direction since March 1st.
MCT’s data shows a slight increase in prepayments during the month February, particularly associated with 2023 – 2025 vintages.
Current servicing released premiums (SRP) remain relatively strong as major aggregators continue to offer record SRP prices, including FHA production. We anticipate those levels to remain elevated as we enter Q2, 2026. The current average SRP levels have increased by another 3-6 basis points from January levels leading to a slight widening of the spread between fair value and SRP.
The current spread between fair value and SRP is about 15-20 basis points. We continue to advocate for caution when capitalizing new MSR production at moderate price levels as current SRP levels reflect the aggregator’s economies of scale rather than actual fair value.
Bulk MSR Market
Bulk MSR trade activities were robust during the month of February and active since the start of the year. MCT’s recent bulk MSR offerings generated attractive prices that were above 5.0X of servicing fees. MCT anticipates bulk MSR activity to remain as buyers continue to offer aggressive pricing levels while loan origination levels remain tight.
MSR buyers remain bullish about the strength of the MSR market and intend to acquire more MSRs. The MSR market is experiencing some consolidation which is likely to increase throughout the remainder of 2026 as the mortgage lending market navigates economic and global uncertainties. MSRs continue to offer attractive yields and income for servicers, especially while loan originations volume remains low.
Bulk MSR portfolios continue to generally trade at servicing fees multiples between 5.00X and 5.50X. Government MSRs with no delinquencies and with interest rates below 5.00% continue to trade at around 4.00X. Newer conventional loan vintages from 2024 and 2025 are trading at between 4.00X and 4.50X multiples of servicing fees.
Non-QM and Second Mortgages Trends
Non-QM loan production continues to command robust levels as the industry heads into the second quarter of 2026.
Non-QM servicing delinquencies and prepayments continue to rise within portfolios. MCT’s data show that recent prepayment levels have crossed into the double-digit zone during the second half of 2025 and through February 2026. Non-QM delinquencies remain slightly higher than agency portfolios.
Non-QM production margins remain tight leading to scrutiny over overall pricing levels. Although demand for Non-QM products remain very strong even though prices have tightened as buyers are becoming more confident in this product and its performance. MCT anticipates that No-QM loan values will remain steady and potentially steadily rise over the course of the year.
Homeowners’ built-in equity remains rich at about $35 trillion. Closed-end 2nd mortgages and HELOC production seem to have leveled off during the first two months of 2026, after experiencing strong production throughout 2025. This is primarily due to lower mortgage rates as more borrowers opted to refinance their existing loans instead.
The bulk MSR market for these two segments remains virtually nonexistent. Underlying fair values for non-QM MSR products remain between 3.75 – 4.25 multiples of servicing fees while Second Mortgages and HELOC MSR products fair values are between 2.25x and 3.25x multiples of servicing fees.
Did you know MCT offers non-qm portfolio valuations? Contact the MSR team today to learn more or schedule a consultation.
Mortgage Rates
As of February 28, 2026, the current 30 Year fixed mortgage rate is 6.008%, which represents about nine and three eighths (9.375) basis points decline from January 31, 2026, mark.
However, since February 28, mortgage rates have reversed course and now the current fixed 30-year mortgage rate is 33.1 basis points higher from February 28, 2026, mark. The global political and economic tensions are the primary drivers behind the increase.
Escrows and Float Income
Mortgage escrow values have declined from their January 31, 2026, mark due to 14 .6 basis points decline in the float income rate. Note: Escrow float income value is the second largest contributor to the overall MSR value.
Rates Indices
Mortgage rates have edged slightly lower from January 31, 2026, marks. MCT’s Primary 30 Year mortgage rate declined by nine and three eighth (9.375) one basis points to 6.008%.
The current Treasury Yield Curve continues to reflect some economic distress and future economic uncertainties.
As of February 28, 2026, the yield on the benchmark 10-year Treasury is at 3.941%, representing a 29.8 basis points decline from the prior month. The current yield curve remains steep, but has started to flatten since March 1, 2026, due to global political and economic uncertainties.
The current spread between the 2 Yr Treasury rate and the 10 Yr Treasury rate is on a trajectory that signals the potential for more economic challenges ahead. The current spread has tightened by 15 basis points since January 31,2026.
Fair Value Guidance
Our February 28, 2026, fair value guidance for existing portfolios should reflect slight declines from their January 31, 2026, marks due to both weaker mortgage rates and float income rates. We anticipate that portfolios with an average interest rate above 6.0% will experience lower values ranging between 1-4 basis points while portfolios with an average interest rate below 6.0% will experience lower values between 1-2 basis points.
MSR holders should expect a maximum change in values ranging between -1 and -4 basis points. For portfolios that have a mix of Conventional and Government loans, we anticipate Fair Value changes as follows:
- Conventional loans between -1 to -3 bps change from January 31, 2026, marks.
- Government loans between -2 to -4 bps change from January 31, 2026, marks.
If you have any questions or would like to schedule a call with our MSR team, please contact us today.
About MCT:
For over two decades, MCT has been a leading source of innovation for the mortgage secondary market. Melding deep subject matter expertise with a passion for emerging technologies and clients, MCT is the de facto leader in innovative mortgage capital markets technology. From architecting modern best execution loan sales to launching the most successful and advanced marketplace for mortgage-related assets, lenders, investors, and network partners all benefit from MCT’s stewardship. MCT’s technology and know-how continues to revolutionize how mortgage assets are priced, locked, protected, valued, and exchanged – offering clients the tools to thrive under any market condition. For more information, visit https://mct-trading.com/ or call (619) 543-5111.
Media Contact:
Ian Miller
Chief Marketing Officer
Mortgage Capital Trading
619-618-7855
pr@mctrade.net
