Fed’s MBS Purchases Reach $115 Billion

The Federal Reserve Bank of New York on Thursday announced it had purchased another whopping $23.2 billion of agency mortgage-backed securities for the week ending Feb. 11, bringing total purchases so far to $114.96 billion. The weekly purchase announcements are second only to the second week in January — Jan. 8 to Jan. 14 — when total agency MBS purchases for the week came to $23.4 billion. The Fed purchased nearly $14.7 billion from Freddie Mac (FRE), the most purchased from that government-sponsored entity (GSE) since $15.8 billion was bought off its books in the week ending Jan. 14. The Fed reported another $7.2 billion bought from Fannie Mae (FNM) and $1.4 billion from Ginnie Mae — the smallest weekly purchase from Ginnie since the first week of purchases, Jan. 5 to Jan. 7, when the Fed bought $450 million from the agency. The week’s purchases mean the Fed has taken a total $57.9 billion off Freddie’s hands, $45.06 billion from Fannie’s books and $12 billion from Ginnie. In the week ending Feb. 11, the Fed purchased only $200 million in agency coupons with 15-year maturities. The rest of its purchases occurred in maturities with 30-year and other maturities. Of the Fed’s total purchases so far, approximately 94 percent have been purchases of agency coupons with 30-year maturities. About 5 percent have been purchases of coupons with 15-year maturities, and just under 1 percent has consisted of purchases of coupons with other maturities — 20- and 40-year maturities, for example. The Federal Reserve in early February announced it had selected JP Morgan Chase & Co. (JPM) as custodian for the program, which began on Jan. 5 and will purchase up to $500 billion in MBS that are backed by government-sponsored entities, in an effort to maintain liquidity in a vital section of the U.S. mortgage market. The Fed has also said it may soon begin modifying mortgages it owns within the assets it owns. Write to Diana Golobay at [email protected]. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.