GSEs, mortgage rates, and secondary market activities
By: Andreas Lehnert, Wayne Passmore, and Shane M. Sherlund.
Contributors: Passmore, Wayne.; Sherlund, Shane M.
Series: Finance and economics discussion series ;; 2005-07; Finance and economics discussion series (Online) ;; 2005-07.
Publisher: Federal Reserve Board
Published: 2005
Place of publication: Washington, D.C
Language: eng
Format: Electronic resource
Description: "Fannie Mae and Freddie Mac are government-sponsored enterprises (GSEs) that purchase mortgages and issue mortgage-backed securities (MBS).  In addition, the GSEs are active participants in the primary and secondary mortgage markets on behalf of their own portfolios of MBS.  Because these portfolios have grown quite large, portfolio purchases as well as MBS issuance are likely to be important forces in the mortgage market.  This paper examines the statistical evidence of a connection between GSE actions and the interest rates paid by mortgage borrowers.  We find that both portfolio purchases and MBS issuance have negligible effects on mortgage rate spreads and that purchases are not any more effective than securitization at reducing mortgage interest rate spreads.  We also examine the 1998 liquidity crisis and find that GSE portfolio purchases did little to affect interest rates paid by borrowers.  These results are robust to alternative assumptions about causality and to model specification"--Federal Reserve Board web site.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 2/3/2005.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.