The central bank may reduce its purchase of new agency MBS, but experts say it’s unlikely to allow current holdings to roll off. That reinvestment strategy means the Fed’s post-taper purchases could approach $60 billion in MBS a month.
While banks and foreign investors have increased their holdings of agency MBS in recent quarters, the Federal Reserve continued to buy over half of net new issuance during the second quarter. (Includes three data charts.)
The Fed could end its stimulus-related purchases of agency MBS by the middle of 2022; S&P official provides an example of just how conservative rating services can be when assessing non-agency MBS and ABS.
The blueprint would reverse capital requirements set in December, which offered few incentives for the GSEs to complete credit-risk transfer transactions.
MISMO and SFA are separately working to update the ASF dataset for non-agency MBS; BNY Mellon is offering new agency MBS service; a relatively rare downgrade for commercial MBS.
Several top REITs hunkered down in the choppy agency MBS market during the second quarter, while others continued pushing into MSRs and the non-agency mortgage sector. (Includes data chart.)