Private investors could buy as much as $365 billion in agency mortgage-backed securities in 2011, taking over the government's role in the secondary market, according to the analysts at Barclays Capital. In the early part of the decade, Fannie Mae and Freddie Mac have led purchases, followed in recent years by the Federal Reserve and the Treasury Department as the housing market tries to recover. But by 2011, both the Fed and the government-sponsored enterprises "will be in run-off mode." Barclays analysts expect banks and money managers to be aggressive buyers of agency MBS next year, purchasing roughly $150 billion each over the next 12 months. Recent increases in MBS yields will also help demand as it reduces the heavy risk. "In fact, it is worth noting that the Fed has already gone from being long the basis to effectively being short (by allowing portfolio run-off while buying Treasurys) this year. And yet agency MBS performance has not been too shabby," analysts said. New issuance, however, will remain low with increased buyouts, weak new home sales and still bottoming home prices. But the biggest key to the 2011 secondary market will be the Treasury Department's long-term plan for the GSE's to be submitted in January. But like JPMorgan Chase (JPM) analysts said last week, reform is still a few years away. "A transition to any other system is at least a decade-long process, we think, not the three to five years that many policymakers want. For the foreseeable future, the agency MBS market should not just survive, but expand," analysts said. Write to Jon Prior.