NEW YORK: Fannie Mae and Freddie Mac have begun placing sizeable orders to purchase mortgage-backed securities (MBS), stepping into a market roiled by widening bond spreads and a surge in volatility, according to a person with direct knowledge of the matter.
The government-controlled entities are moving to capitalise on a sharp sell-off while expanding their already significant portfolios of bonds and loans, said the person, who asked not to be identified discussing confidential information.
Their efforts follow a directive two months ago from President Donald Trump instructing the companies to acquire US$200bil of MBS as part of a push to drive down mortgage rates and bolster housing affordability.
The increased buying could help cushion a spike triggered by the US, Israel and Iran war that’s sent those rates to a three-month high.
Still, it may only partially offset the broader market pressures stemming from the Iranian conflict, punctuated by a marked jump in treasury yields last Friday. — Bloomberg
