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Freddie Mac’s Support of Its MBS Boosted Purchases in October

NOV 29, 2012 1:06pm ET
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Freddie Mac’s efforts to support the pricing of its MBS—known as “participation certificates”—resulted in a spike in its loan and MBS purchases in October.

National Mortgage News reported Wednesday that Freddie purchased $50 billion of loans in October, the highest reading since June 2009.

When asked about the spike in purchase activity, a Freddie official noted that some of the purchases “reflected PC support activities.”

Due to larger volumes and other factors, Fannie Mae MBS generally receive better pricing than Freddie Mac PCs. “From time to time, including recently, we seek to support the liquidity of the market for our PCs and the relative price performance of our PCs to comparable Fannie Mae securities,” a Freddie spokeswoman told National Mortgage News.

Freddie’s October activity report shows the GSE purchased $15 billion of loans and PCs for its mortgage investment portfolio. It was the highest level of portfolio purchases since September 2011.

Freddie curtailed its PC support activities during the first half of this year, but started up again in the third quarter, according to the GSE’s third-quarter securities filing.

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