Mortgage-backed securities boom breaks monthly record

New high in single-family home category

TRD NATIONAL /
Sep.September 16, 2020 10:30 AM
The value of single-family mortgage-backed securities hit a new monthly record, and demand is still strong. (iStock)

The value of single-family mortgage-backed securities hit a new monthly record, and demand is still strong. (iStock)

Thanks to low mortgage rates and a surge in home-loan refinancing, the number of mortgage-backed securities has skyrocketed.

The value of single-family mortgage-backed securities issued by Ginnie Mae, Fannie Mae and Freddie Mac was almost $322 billion in August, a new monthly record, according to an analysis by industry-research firm Inside Mortgage Finance cited by the Wall Street Journal.

However, yields for the securities have been relatively steady in recent months and even declined slightly. That’s partly because the Federal Reserve said in March it would purchase an essentially unlimited amount of mortgage bonds in an attempt to backstop the credit markets.

Banks have also increased their mortgage bond holdings as they have been flooded with deposits.

Applications for new home loans and refinancing have soared in recent months as pandemic shutdowns ended and interest rates fell.

[WSJ] — Sasha Jones


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