Falling Mortgage Bond Spreads

The stock market had a massive day.

Bloomberg reports:

March 18 (Bloomberg) — Yields on agency mortgage-backed securities tumbled to the lowest in more than a month relative to U.S. Treasuries amid speculation that capital constraints may be eased at Fannie Mae and Freddie Mac.

The difference in yields on the Bloomberg index for Fannie Mae‘s current-coupon, 30-year fixed-rate mortgage bonds and 10- year government notes narrowed about 8 basis points to 161 basis points, or 76 basis points less than the 22-year high reached two weeks ago. The spread helps determine the interest rate on new prime home mortgages of $417,000 or less.

Capital requirements for Fannie Mae and Freddie Mac, two of the biggest buyers of mortgage assets, may be eased though not removed, the Wall Street Journal reported yesterday. Their regulator should allow the companies to expand their portfolios with “the right kind of loans” to aid the slumping housing market, House Financial Services Committee Chairman Barney Frank said in a telephone interview from Washington yesterday.

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (Alexander90210.com), he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Alexander90210.com. Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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