Fed MBS Purchases Increase for Fifth Consecutive Week

The Federal Reserve today reported on their weekly purchases of agency mortgage-backed securities (MBS). In the five trading days between August 27 and September 2, the Federal Reserve purchased a total of $25.65 billion agency MBS.

Since the inception of the program the Federal Reserve has spent $817.65 billion, 65.41% of the allocated $1.25 trillion which is scheduled to run out by the end of 2009.

The goal of the Federal Reserve's agency MBS program is to provide support to mortgage and housing markets and to foster improved conditions in financial markets more generally. Only fixed-rate agency MBS securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae are eligible assets for the program. The program includes, but is not limited to, 30-year, 20-year and 15-year securities of these issuers.

Of the $25.65 billion MBS purchases:

• $1.50 billion was used to buy 30 year 4.5 MBS coupons. 5.85% of total weekly purchases.
• $16.375 billion was used to buy 30 year 5.0 MBS coupons. 63.84%  of total weekly purchases.
• $7.775  billion was used to buy 30 year 5.5 MBS coupons.  30.31%  of total weekly purchases.

Of the $25.65 billion total. 67.5% of the mortgage-backs purchased were Fannie Mae coupons while 32.5% were Freddie Mac. The Federal Reserve bought no Ginnie Mae coupons last week.

The Fed's daily purchase average was $5.13 billion per day, an increase from last week's daily average of $5.08 billion per day.

Here is a chart illustrating the evolution of the Federal Reserve's Agency MBS Purchase Program. This is the fifth week in a row the Federal Reserve has increased spending in the mortgage market.

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