Skip to comments.QE3 (MBS): Mortgage Rates Decline But The Spread Is Captured by Mortgage Agencies
Posted on 10/01/2012 2:07:19 PM PDT by whitedog57
What has happened since The Fed announced its QEternity? The New York Fed purchased $0 billion of agency (GNMA, FNMA, FHLMC) mortgage-backed securities last week as promised.
The results so far?
As of 9/28/2012, the Bankrate 30 year fixed rate mortgage average rose slightly after dropping on the QEternity announcement.
The spread between the Fannie Mae current coupon rate (paid on new Fannie Mae MBS) over the 10 year Treasury yield has risen to a positive spread after dipping into negative territory last week.
On the other hand, the spread between the Bankrate 30 year fixed rate mortgage average and the Fannie Mae current coupon is near an all time high indicating that the agencies are capturing rents from The Feds agency MBS purchases.
Given Chairman Bernankes comments today, lets see if the QEternity starts flowing through to consumers instead of to the government mortgage agencies.
We expect that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economy strengthens, doesnt mean that we expect the economy to be weak through to that year.
So Bernanke is signaling that the economy will improve, but he will still insist on asset bubbles.
(Excerpt) Read more at confoundedinterest.wordpress.com ...
That was supposed to be $40 billion in agency MBS purchases, not $0.
Big bonuses are expensive....
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