Fed's Agency MBS Purchases Fall for Fourth Straight Week

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The Federal Reserve today reported on their weekly purchases of agency mortgage-backed securities (MBS). In the five trading days between July 30 and August 5, the Federal Reserve purchased a total of $19.15 billion agency MBS.  Since the inception of the program the Federal Reserve has spent $721.20 billion or 57.7% of the allocated $1.25 trillion.

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 $19.15 billion weekly purchases:

  • $1.9   billion  was used to buy 30 yr 4.5 MBS coupons.  9.92%   of total weekly purchases.
  • $11.2 billion was used to buy 30 yr 5.0 MBS coupons.  58.49% of total weekly purchases.
  • $6.05 billion was used to buy 30 yr 5.5 MBS coupons.  31.59% of total weekly purchases.

The Fed's daily average of MBS purchases was $3.83 billion per day, less than the previous week's average of $4.03 billion per day. This was the fourth consecutive week the Fed's daily purchase average has fallen. Because the Federal Reserve has been the primary source of liquidity to originators looking to sell their loans in the secondary mortgage market, the falling purchase average implies that activity in the mortgage market continues to slow.

Here is a chart illustrating the evolution of the Federal Reserve's Agency MBS Purchase Program. The Fed's weekly purchases have been steadily falling since late March.