Agency Mortgage-Backed Securities (MBS) Market: Market Commentary and Outlook

Pioneer Investments’ April 2026 Agency Mortgage-Backed Securities (MBS) Market Commentary and Outlook reviews a month shaped by geopolitical uncertainty, risk-on sentiment, Federal Reserve expectations and shifting mortgage market technicals.

Agency MBS performance was broadly correlated with broader market sentiment in April. Despite persistent uncertainty tied to the U.S.-Iran conflict and renewed concerns around oil prices and inflation, broader risk assets rallied and agency MBS outperformed Treasuries for the month.

Agency MBS followed along in April’s risk optimism

• The Bloomberg U.S. MBS Index returned 0.07% for the month, with a +0.24% excess return to Treasuries.
• Sector option-adjusted spread tightened by 4 basis points to +20 basis points.
• Recent production par coupon bonds outperformed lower coupons, tightening by 6 basis points in OAS and 11 basis points nominally.

Agencies grew portfolios in March by the most since 2009

Fannie Mae added $18 billion of MBS to its portfolio in March, its largest monthly increase since 2009. Freddie Mac added $1 billion, as $12 billion in single-family MBS additions were offset by $11 billion in sales of multifamily loans.

Pioneer believes the agencies are price-sensitive investors that may add $200 billion of MBS collectively in 2026. Their combined portfolios stood at $332 billion at the end of March, leaving $118 billion of remaining capacity if the recent pace continues.

This portfolio growth has helped create the lowest issuance for private investors to digest net of government and government-sponsored entities since 2014, aside from the quantitative easing period in 2020.

Fannie and Freddie began accepting VantageScore4 loans

In April, Fannie Mae and Freddie Mac began accepting mortgages from borrowers using the VantageScore4 credit score as an alternative to FICO.

While calibrated to the same scale, VantageScore4 scores tend to vary from FICO scores, averaging about 10 points higher, with about 15% of loans landing more than 50 points higher for the same borrower.

Pioneer notes that both VantageScore4 and an upcoming FICO scoring update incorporate trended data, as well as rent and utility payments, in an effort to improve loan performance prediction and expand housing access.

Outlook: Range-bound dynamics, driven by exogenous factors

Pioneer expects agency MBS spreads to remain range-bound, with movement within that range influenced by external headlines and short-term market dynamics.

• Valuations: Mortgage OASs to Treasuries remain toward the tight end of their five- and 10-year ranges, but OAS to swaps appears more balanced due to negative swap spreads.
• Technicals: Asset managers could continue reducing MBS allocations at tighter spreads, while banks, agencies, mREITs and overseas investors may provide support at wider spreads.
• Fundamentals: Faster prepayments and changing government policy could create risks, but may also increase security selection opportunities.

Pioneer is more constructive on agency MBS as a positive contributor to aggregate, multi-sector or multi-asset portfolios, and currently prefers MBS relative to swaps rather than Treasuries.

Read the full report for Pioneer Investments’ complete agency MBS market commentary, securitized market dashboard, performance analysis and disclosures.

READ MORE FROM PIONEER INVESTMENTS

Prepared by

Tyler Patla, Senior Vice President, Deputy Director of Core Fixed Income, Director of Agency Mortgages, Portfolio Manager

Important Information

Marketing Communication. For Professional Client and/or Institutional Use Only. Not for Use with the Public.

Past performance is no guarantee of future results.

All investing involves risk, including the possible loss of principal. An investment should be made with an understanding of the risks involved with owning a particular security or asset class.

Unless otherwise stated, all information contained in this document is from Pioneer Investments, a Victory Capital® Investment Franchise. The views expressed in this presentation are those of Pioneer Investments as of the date noted, and are subject to change at any time. These views should not be relied upon as investment advice, as securities recommendations, or as an indication of trading intent on behalf of any portfolio.

The services and any securities described in this document may not be registered for sale with the relevant authority in your jurisdiction and may not be regulated or supervised by any governmental or similar authority in your jurisdiction. Where unregistered, they may not be sold or offered except in the circumstances permitted by law. Pioneer Investments is not making any representation nor does this document constitute a representation with respect to (i) the eligibility of any recipients of this document to acquire any securities or any services described herein in any jurisdiction or (ii) the eligibility of any recipients of this document to receive this document in any jurisdiction. If you are in doubt about the content of this document or your eligibility, you should obtain independent professional advice.

Each portfolio is actively managed. Sector allocations are subject to change. Holdings are subject to change and should not be construed as investment advice or a recommendation to buy, sell, or hold any security. Information relating to portfolio holdings is based on the representative account in the composite and may vary for other accounts in the strategy due to asset size, client guidelines and other factors.

Indexes are unmanaged; their returns include reinvestment of dividends and other income but do not reflect management fees, transaction costs or expenses. It is not possible to invest directly in an index. Past performance does not guarantee future results.

Compliance Statement: Victory Capital Management Inc. claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. Victory Capital Management Inc. has been independently verified for the period from January 1, 2001, through December 31, 2023. The verification report is available upon request. A firm that claims to comply with the GIPS standards must establish policies and procedures for complying with all the applicable requirements of the GIPS standards. Verification provides assurance on whether the firm’s policies and procedures related to composite and pooled fund maintenance, as well as the calculation, presentation, and distribution of performance, have been designed in compliance with the GIPS standards and have been implemented on a firm-wide basis. Verification does not provide assurance on the accuracy of any specific performance report.

Advisory Services offered by Victory Capital Management Inc.

©2026 Victory Capital Management Inc.

20260519-5492380