Real estate investment trusts that focus on agency MBS increased their earnings in the third quarter, helped by interest rate trends.

The prepayment rate on agency MBS hit a high for the year in September and that’s expected to be topped again in October. Analysts note that their prepayment models are off due to changes in lenders’ practices.

Neither Fannie nor Freddie issued any green bonds in the third quarter, though social bond issuance has been relatively healthy.

Fed still working toward a Treasury-only balance sheet; BlackRock, Hoplon units partner to bring in new ABS issuers; ABS East set for record attendance; CREFC adjusts plans for DC symposium.

In the early years of Fannie/Freddie conservatorship, investors were seeking an explicit guarantee of GSE MBS as part of any reform effort. More recently, they have shown an acceptance for maintaining an implicit guarantee.

One way to get mortgage rates to decline and stay that way is to entice more institutional investors to buy agency MBS. The Federal Reserve is no longer increasing its holdings, but how much room is there at Fannie and Freddie? Answer: more than you might think.

The securitization rate for residential mortgages came down after reaching an elevated level in the first quarter of 2025. The rate declined for both GSE-eligible mortgages and non-agency loans during the second quarter. (Includes data table.)

Daily trades in agency MBS aren’t at bragging levels, but there is one positive: Spreads are narrowing.

With the Fed widely expected to reduce the federal funds rate next week, demand for agency MBS is rising. Banks are also projected to add to their holdings, though their buying might be somewhat delayed.

The Trump administration wants to take Fannie Mae and Freddie Mac public, but it’s not clear whether the two would go public as one merged entity or as two separate companies.