Barclays Says FHFA Plan to Have Little Impact on MBS

The Federal Housing Finance Agency’s latest plan for a single mortgage-backed securities platform will not have any short- or medium-term effects on government-sponsored enterprise securities, according to a report from Barclays.

However, the analysts said it remains unclear if the new structure will be adopted by the market after the GSEs close unless there is a congressional mandate.

As for the potential of hikes in g-fees, Barclays believes there is “likely to be tremendous policy pressure against substantial fee hikes. Some Federal Open Market Committee members have already indicated in speeches that these hikes are negating some of the intended simulative effects of the Fed’s MBS purchase program.”

The report also commented on the FHFA’s plan to sell 5% of the illiquid portion of the securities portfolio. Barclays believes this will not result in lower prices for nonagency assets.

“The sales are supposed to satisfy the following criteria: be economically sensible, operationally well controlled, involve a meaningful transfer of risk and be transparent to the market place. The condition that sales be operationally well-controlled could be interpreted to mean that they will not be keen on selling if they perceive that sales are causing a market disruption,” the report said.