Fed Buys Net $25.45 Billion Agency MBS

The Federal Reserve today reported on their weekly purchases of agency mortgage-backed securities (MBS). In the five trading days between September 10 and September 16, the Federal Reserve purchased a total of $31.22 billion agency MBS. In those five days the Federal Reserve sold a total of $5.77 billion agency MBS, bringing the weekly net total to $25.45 billion.

The goal of the Federal Reserve's agency MBS program is to provide support to mortgage and housing markets and to foster improved conditions in financial markets more generally. Only fixed-rate agency MBS securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae are eligible assets for the program. The program includes, but is not limited to, 30-year, 20-year and 15-year securities of these issuers.

Since the inception of the program the Federal Reserve has spentrn$861.90 billion, 68.95% of the allocated $1.25 trillion which on pacernto run out by the end of 2009.

Of the net $25.45 billion purchases:

• $4.75 billion was used to buy 30 year 4.5 MBS coupons.  18.66% of total weekly purchases.
• $8.70 billion was used to buy 30 year 5.0 MBS coupons.  34.18%  of total weekly purchases.
• $9.55  billion was used to buy 30 year 5.5 MBS coupons. 37.52% of total weekly purchases.
• $1.15 billion was used to buy 15 year 4.0 MBS coupons.  4.52% of total weekly purchases
• $1.30 billion was used to buy 15 year 4.5 MBS coupons.  5.11% of total weekly purchases.

Of the $25.45 billion total. 61.7% of the mortgage-backs purchased were Fannie Mae coupons while 24.8% were Freddie Mac, and 13.56% Ginnie Mae.

The Fed's daily purchase average was $5.09 billion per day, an increase from last week's daily average of $4.70 billion per day. The faily purchase average more than doubles the amount of new loan supply sold by mortgage bankers looking to hedge their pipeline from interest rate risk

Here is a chart illustrating the evolution of the Federal Reserve's Agency MBS Purchase Program.

Chart represents 30 year coupon purchases only

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