Fed's Weekly MBS Purchases Stay $31bn Strong
The Federal Reserve's agency mortgage-backed securities (MBS) purchase program shows no signs of slowing this week, with the Fed buying $31.2bn of MBS in the week ending September 16. The Fed bought a gross $21bn from Fannie Mae (FNM), $6.37bn from Freddie Mac (FRE) $3.8bn from Ginnie Mae, according to data provided Thursday by the New York Fed. The Fed also sold $5.77bn of MBS the same week in an ongoing participation in the "roll" market, in which the Fed buys securities on the condition it will later sell them back. This structure provides short-term liquidity to the mortgage giants, which in turn buy and bundle more mortgages. Of the Fed's $861.9bn net purchases after sales so far under the program, the most (59%) MBS were bought from Fannie, according to analysis by Barclays Capital. The second largest contributor by net volume is Freddie with 33% of the Fed's purchases. Ginnie claims 8% of the Fed's net purchases so far. The latest data on weekly purchases comes as government and industry groups consider the formation of a new breed of agency MBS -- or restructuring of the agencies themselves. Both discussions miss a major point, however, failing to address the integral role the agencies played in forging and maintaining the MBS market seen today, according to HousingWire's Linda Lowell. Write to Diana Golobay.