Fed Providing Plenty of Liquidity To Mortgage Market
The Federal Reserve today reported on their weekly purchases of agency mortgage-backed securities (MBS). In the five trading days between August 13 and August 19, the Federal Reserve purchased a gross total of $26.640 billion agency MBS. After subtracting sales (providing liquidity/the roll) the Fed's net weekly purchases totaled $25.00 billion agency MBS.
Since the inception of the program the Federal Reserve has spent $766.60 billion, 61.33% 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 net $25.00 billion weekly purchases:
- $2.175 billion was used to buy 30 year 4.5 MBS coupons. 8.70% of total weekly purchases.
- $15.75 billion was used to buy 30 year 5.0 MBS coupons. 63.00% of total weekly purchases.
- $7.075 billion was used to buy 30 year 5.5 MBS coupons. 28.30% of total weekly purchases.
The Fed's daily purchase average was $5.00 billion per day, an increase from last week's daily average of $4.08 billion per day. This is twice the amount of average daily originator selling, illustrating that the Federal Reserve continues to provide ample liquidity to mortgage bankers looking to hedge their pipelines of committed and uncommitted loans.
Of the $25.00 billion net total. 70% of the mortgage-backs purchased were Fannie Mae coupons, 23% were Freddie Mac, and 7% were Ginnie Mae.
In this week's reporting period, the Federal Reserve's targeted coupon purchases shifted towards higher MBS coupons. In the previous report 14.71% of net purchases were 4.5 coupons and 51.47% were 5.0 coupons. This week 4.5s fell to 8.70% of net total and 5.0s increased to 63.0% of net purchases.
Here is a chart illustrating the evolution of the Federal Reserve's Agency MBS Purchase Program.
All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.
Leave a Comment
By John Gittelsohn August 24, 2020, 4:00 AM PDT Some of the largest real estate investors are walking away from Read More...Late-Stage Delinquencies are Surging
Aug 21 2020, 11:59AM Like the report from Black Knight earlier today, the second quarter National Delinquency Survey from the Read More...Published by the Federal Reserve Bank of San Francisco
It was recently published by the Federal Reserve Bank of San Francisco, which is about as official as you can Read More...