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Wall Street getting hungrier for private-label MBS?

Fed credit officer survey says yes

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Wall Street is getting hungrier for private-label mortgage-backed securities, if the Federal Reserve’s quarterly survey of senior credit officers is accurate.

“With regard to securities financing, nearly one-half of dealers reported an increase in demand for funding of non-agency residential mortgage-backed securities (RMBS), and two-fifths of respondents also noted increased demand for term funding against such collateral,” the survey reports.

This means more private capital, which has been largely shut out of the housing market, could find its way into an industry backed almost entirely with capital from the government-sponsored enterprises of Fannie Mae and Freddie Mac.

“Dealers assessed liquidity and functioning as having improved in the non-agency RMBS market, while conditions in the cash markets for other collateral types were reported to be basically unchanged,” the Fed reports.

The survey says almost half of the bigger dealers in the market reported an increase in demand between December and February.






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