I get it. Mortgage servicers make money by servicing, which means they do not want people refinancing. Prepayment is the enemy. When rates go up, less people refinance. It does hurt the originations business though, but that's only a small percentage of revenue at this point. I don't own NSM, I own WAC.
Exactly :-) Thank you!
Mortgage servicers are actually big winners from rising interest . This is because when interest rates rise, the risk of prepayments decreases, lengthening the life of a mortgage loan, which in turn means a longer stream of cash flows. That increases the value of mortgage servicing rights or MSRs.