Trade Groups Advocate for GSEs to Purchase MBS to Mitigate Mortgage Rates

In response to declining investor demand for mortgage-backed securities (MBS), community lenders and banking institutions are advocating for a significant policy shift regarding Fannie Mae and Freddie Mac. They propose that these government-sponsored enterprises (GSEs) be permitted to purchase up to $300 billion in MBS. This initiative aims to stabilize the housing finance market and reinforce liquidity as traditional buyers become more risk-averse in a fluctuating economic climate. By expanding the GSEs’ purchasing capacity, advocates believe it could encourage more lending to consumers and support homeownership, particularly for underserved markets.

The proposed measure reflects a broader concern over the resilience of the mortgage market amidst tightening financial conditions. Stakeholders argue that empowering Fannie Mae and Freddie Mac to acquire more MBS could alleviate pressure on mortgage rates and enhance accessibility for borrowers. This move could also serve as a buffer against potential market disruptions, ensuring that the mortgage system continues to function efficiently during periods of uncertainty.

– **Proposed Purchase Limit**: Community lenders advocate for GSEs to buy up to $300 billion in MBS.
– **Market Stability**: Aims to counteract weakening investor demand in the mortgage sector.
– **Enhanced Liquidity**: Expanding GSE operations may promote lending and support homeownership.
– **Support for Underserved Markets**: Focuses on enhancing accessibility for consumers, particularly those in marginalized communities.
– **Mitigating Market Disruptions**: Strengthening the mortgage system’s resilience amid economic uncertainties is a key goal.

You can read this full article at: https://www.housingwire.com/articles/gse-buy-mbs-lower-mortgage-rates/(subscription required)

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