Fed's Agency MBS Purchases Slow Ahead of 2010
As HousingWire's sources on Wall Street indicated over the weekend that the government-sponsored enterprises (GSEs) remain in a state of flux, a key government purchase program continues to wind down. The Federal Reserve Bank of New York bought $15bn of mortgage-backed securities (MBS) from mortgage giants Fannie Mae (FNM), Freddie Mac (FRE) and Ginnie Mae in the week ending December 23. The Fed's gross purchases for the week came to $17.43bn before $2.43bn of MBS sales, according to details released on Christmas Eve by the NY Fed. The Fed bought $7.8bn from Freddie, $8.95bn from Fannie and $680m from Ginnie. The Fed set the purchase cap at $1.25trn under the program, which is expected to conclude by the end of Q110. A longer deadline than the original Dec. 31, 2009 aims to coax private investors back into the market and provide a more smooth transition out of government support. HousingWire's Linda Lowell discussed over the weekend the way the Fed's demand for agency MBS over the last year held mortgage spreads close to historical tights for months. But analysts wonder how much spreads will widen out again after the Fed exits its purchase program. The NY Fed earlier indicated weekly purchases of agency MBS would slow to an eventual conclusion. This week's net $15bn of purchases marks a slow-down from the $16bn seen in recent weeks. Write to Diana Golobay.