"We've seen some activity from the GSEs. Instead of issuing cash window pools and putting those out for the bid, they are retaining all the premium pools, said Jeana Curro, managing director and head of agency MBS research at Bank of America."
"Curro said the government-sponsored enterprises initially focused on conventional, production-coupon securities, which are most closely tied to primary mortgage rates. That's the best way to bring the primary mortgage rate down, she said."
"The market initially reacted strongly after President Donald Trump signaled support for increased activity, directing the GSEs toward a $200 billion expansion of their MBS portfolios."
"The shift underscores a broader reality: GSE purchases are only one piece of the rate puzzle. While they can provide incremental support, movements in the 10-year Treasury yield remain a more powerful driver."
Fannie Mae and Freddie Mac have recently engaged in the mortgage-backed securities market with a cautious and selective approach. Their activities have been overshadowed by geopolitical tensions, particularly the U.S.-Iran conflict. Initially, they focused on conventional securities to lower primary mortgage rates, but later shifted to premium pools for better relative value. Despite initial market reactions to a $200 billion expansion signal, the impact has been limited, with spreads widening and Treasury yields remaining the dominant influence on rates.
Read at www.housingwire.com
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