As long as the GSEs are profit-seeking entities, Urban Institute analysts suggest that allowing Fannie and Freddie to buy large amounts of agency MBS would leave the GSEs “with every incentive to swell their balance sheets to enormous levels during these periods of volatility.”

Freddie sets an end date for investors to exchange legacy securities for those created as part of the single security initiative.

Fannie and Freddie have upped their retained MBS holdings significantly in recent months, as have the Federal Home Loan Banks. Analysts expect money managers and insurance firms to remain key investors. (Includes two data tables.)

Annaly Capital Management remained the top REIT in MBS holdings, though several other shops expanded their portfolios at higher rates during the third quarter. The REIT industry added roughly $40 billion to its combined portfolio over the past year. (Includes two data tables.)

The growing securities holdings in Fannie’s retained mortgage portfolio include a large share of non-Fannie agency MBS.

Treasury researchers develop new measures to predict interest rates on mortgages using shifts in MBS prices.

Federal banking regulators issued a final rule to adjust the enhanced supplementary leverage ratio that applies to large banks. The directive aims to increase bank investments in low-risk assets, including Ginnie Mae MBS.

The Fed established the Bank Term Funding Program to help alleviate pressure faced by depository institutions holding MBS and other assets with large unrealized losses. Tracking usage of the BTFP in real-time was limited.

Banks increased their holdings of agency MBS during the third quarter, although investment in Ginnie Mae pass-throughs fell. The industry also pulled back a bit from non-agency MBS. (Includes two data tables.)

Securities industry stakeholders say preservation of the secondary mortgage market, especially MBS futures trading on the TBA market, is essential to keeping mortgage rates low.