GovGex November SBA Secondary Market Update
Premiums near 110% with increase servicing
The GovGex Index reached a record high in the 25-year loan category during the month of November, while 10-year loans edged down slightly but remained close to October prices. Fully priced 25-year loans continued to frequently trade at 110, with the servicing fee becoming the playing field for bidders to compete for the most valuable deals, reaching up to 1.3%. To account for the increased servicing fees, we updated our pricing model for November, resulting in more accurate predictions for the loans that fetch the highest premiums.
* Note that the SBA retains 50% of any premium above 110%. This amount is collected by the FTA. Some buyers choose to offer 110% premiums with additional servicing as an alternative. For example, 110% with 1.09% retained servicing.
Below is recent price and trend information on SBA loan sale premiums as reported by the GovGex Independent Pricing Service. GovGex Transactions shows actual bids received on loans presented for sale through GovGex. The GovGex Index shows what a Prime + 2 loan of the given term that had just been funded would sell for in each month. The GovGex Index robustly captures month-to-month pricing trends, while also controlling for factors including the age of the loan at the time of sale. For 10 year loans, the Index premium fell 10 basis points between October and November, and for 25 year loans, the premium rose a striking 40 basis points, crossing 108 for the first time..
| GovGex Index™ P + 2% |
GovGex Transactions (November) |
| Month |
10 Year |
25 year |
August
|
106.7%
|
107.3% |
September
|
106.9%
|
107.6% |
| October |
106.6%
|
107.9% |
|
| Deal Term |
Premium |
Servicing |
25
|
110.09% |
1.30% |
25
|
110.00%
|
1.23% |
| 10 |
109.89% |
1.00% |
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Note: the GovGex Index information above represents aggregated data. Subscribers of the GovGex Independent Pricing Service™ receive regular updates of actual transactions and bid levels on GovGex - including loan details and high premium and par bids. With only slight changes in loan structure driving premiums, lenders use the pricing service to structure deals in light of what the market is currently valuing. The GovGex Independent Pricing Service is the only service to provide actual bid levels based on loans presented for sale on GovGex.
About GovGex.com
GovGex is the secure online exchange for selling SBA and USDA loans. Banks turn to GovGex to access over 30 buyers when selling their government guaranteed loans ensuring the most efficient bidding process. Included as GovGex buyers are the SBA Pool Assemblers who are vital to the SBA market and in turn to America 's small businesses. GovGex is an independent source for secondary market pricing information - built on actual bid levels as seen on GovGex.
To learn more, visit www.GovGex.com, or contact us at (617) 381-4906.
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