Fannie Mae and Freddie Mac’s total retained portfolios hit a new multiyear high last month, and March’s numbers could be even higher amid reports they may have stepped up MBS buying to counter market disruption.
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Fannie held $150 billion in its portfolio in February, including nearly $77 billion of its own MBS, $63 billion in mortgage loans, $10 billion in other agency bonds, and $102 million in nonagency securities. It had $142 billion in its portfolio
Freddie recorded a total portfolio size of $139 billion in February, including $82 billion in mortgage loans, $56 billion in agency MBS, and $886 million in nonagency bonds.
With Fannie’s portfolio $8 billion larger and Freddie’s up $2 billion from January collectively the two increased their loans and bond holdings by around $10 billion in the month after the Trump administration announced plans to have the enterprises
“GSE net MBS purchases amounted to $11 billion in February compared with $15 billion in January. This is a little below the $15 billion-$20 billion pace we expected,” Michael Khankin and Pratham Saxena, who are researchers at Barclays, wrote in a report published Friday.
MBS buying does not necessarily equate to what the enterprises hold in their portfolios but tends to factor into it. It also is generally offset by some sales.
The MBS purchases do appear to be lending some stability to a tough market.
“Traders at Fannie and Freddie appear to be jumping into a market characterized as volatile in order to help stabilize prices and investor concerns,” said Michelle Parkison, senior vice president of capital markets, AD Mortgage, in a press statement
However, the MBS buying hasn’t been a cure-all for volatility, with
“It’s definitely been up and down,” Parkison said in an interview, when asked about the market’s effect on mortgage rate activity. “It makes hedging more difficult. You put your rate sheet out at a certain price and you have to hedge that position throughout the day.”
Khankin and Saxena said while the total amount of the planned MBS purchases is relatively large, anticipation of them ending after they hit the limit under the enterprises’ Preferred-Stock Purchase Agreements has begun to be a concern.
“Absent an increase in PSPA caps the market will need to price in the eventual GSE exit sometime this summer. That’s likely to be the defining driver of MBS performance for the remainder of 2026,” they said.