By Isobel Kennedy
NEW YORK (MNI) – The New York Fed Thursday said it purchased $5.2
billion agency mortgage-backed securities in the week-ended October 12
and that it expects to purchase about $22 billion more over the next 30
days.
The MBS purchases stem from the decision at the September 20-21
Federal Reserve Open Market Committee meeting to begin reinvesting the
proceeds from its agency and agency MBS portfolios back into agency MBS.
For a while earlier this year, the Fed was taking those proceeds and
putting them into the Treasury market.
The proceeds in its mortgage and agency portfolios stem from the
prepayments it receives monthly from the mortgages it holds and from the
maturation or coupon payments it receives from its Agency holdings.
In the first week of the program, the Fed bought $3.95 billion
mortgages. Coupled with Thursday’s announced purchases, the Fed has
bought $9.15 billion MBS. At the September meeting, the Fed said it
expected to buy about $20 billion from October 3 to October 12.
Each month the NY Fed will estimate how many MBS it expects to buy
in the following 30 days. These figures come from the prepayment reports
received monthly from the housing agencies.
Thursday the Fed said it expects to buy about $22 billion MBS from
October 12 to November 10. On November 10, the Fed will announce the
purchases expected for the next period.
The Fed’s portfolio of MBS totals about $870 billion, down from its
peak in March 2010 of $1.25 trillion. The Fed’s agency portfolio totals
about $108 billion.
As was the case during the Fed’s 2009-2010 MBS buying program, the
Fed is buying the current coupons that mortgage originators are selling.
In the last two weeks, the bulk of the Fed’s purchases have been in
30-year Fannie Maes and Freddie Macs with 3.5% coupons followed by 4.0%
coupons.
The Fed has also bought some 15-year Fannie Maes and Freddie Macs
and 30-year Ginnie Maes.
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[TOPICS: M$U$$$,MMUFE$,M$$AG$,MN$MO$,MAU0B$]
