MBS is the place to be right now with average daily trading volumes at their peaks for the year.

The sentiment among investors at the ABS East conference this week was overwhelmingly positive. Attendance at the event hit a record, and investor demand for MBS and ABS is expected to remain strong into 2026, buoyed by anticipated interest rate cuts by the Fed.

Trade groups representing smaller lenders called on the Trump administration to prompt the GSEs to increase their holdings of MBS as a way to reduce mortgage rates.

Issuance of specified-pool MBS in the third quarter was up 21.5% at Freddie Mac. The biggest increase was in pools of loans on New York properties.

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.