FOMC

This proposed Libor replacement is an imaginary, backward-looking benchmark dreamed up by the economists at the Fed with no discernible market.

Any intention that Ginnie Mae may have had to slow prepayment rates by changing the rules on RPLs seems to be thwarted by the grim economic reality facing the big banks.

FHFA, HUD and Ginnie Mae should let the rate of prepayments on MBS dictate bond prices and market rates.

The Federal Reserve pledged to maintain at least the current pace of asset purchases and projected interest rates will remain near zero through 2022, as Chairman Jerome Powell committed the central bank to using all its tools to help the economy recover from the coronavirus.

Mortgage rates fell to their lowest level since Freddie Mac started reporting this data in 1971, as the coronavirus shutdown continued to play havoc with the economy.

A number of proposals have been floated for debt payment holidays and other types of moratoria, but such approaches offer solutions that are worse than the problems.

Mortgage prices rose and spreads tightened Monday morning as investors responded favorably to the Federal Reserve's weekend announcement that it will resume net purchases of agency MBS for the first time since October 2014.

The Federal Open Market Committee lowered the fed funds rate target to between zero and ¼% in an emergency meeting on Sunday, but while analysts say the move was needed, they feel it will take more to offset the effects of COVID-19.

Increased refinancing volume led Fannie Mae to raise its 2020 estimate by $300 billion and 2021 projection by $280 billion.

Capacity constraints among mortgage lenders are leading to wider spreads between mortgages and the 10-year Treasury yield even after it remained below 1% for an extended period this week.