Prior to the 2008 housing crisis, the supply of new housing units dipped below 1.25 million only once, in 1982. Following the crisis, the supply didn’t rise above 1.25 million until 2017.
Since the financial crisis, the Fed’s main policy tool has been to lower interest rates by purchasing Treasuries and agency MBS. However, with rates on these securities at record lows, this strategy may no longer work.
The industry has once again written to Congress requesting that guarantee fees be used only as originally intended: as a critical risk management tool to protect against potential mortgage credit losses.
The Trump administration has not only proposed extending the existing g-fee surcharge, but recommends doubling it. Not to be outdone, both Democratic presidential candidates, former Vice-President Joe Biden and Sen. Bernie Sanders, D-VT, also support raising g-fees.
The New York Fed performed two separate repo market maneuvers on Tuesday: a $100 billion overnight operation and a $20 billion 14-day assignment. Both were oversubscribed.