RCA in the commercial property press:

Treasury Set to Dump Billions in Agency Bonds

Globe St reports: Among the significant liabilities taken on by the US Government at the onset of the financial crisis in September 2008, the Treasury Department’s GSE-guaranteed mortgage bond portfolio contains $142.0 billion of securities bought with taxpayer dollars. This past week, the Treasury announced it would begin to sell off these assets at a pace of approximately $10.0 billion per month, depending on market demand, with the goal of complete liquidation in about 12 months.

Responding to the Treasury’s announcement, Real Capital Analytics Global Chief Economist Dr Sam Chandan stated to GlobeSt.com that the move may lead to “…an even more uncertain housing finance market…while conditions have improved, it remains unclear if the market can absorb the full extent of Treasury’s dispositions absent moderately higher returns.” One result of billions in mortgage-backed securities being flooded into a fragile market could be a sharp rise in residential mortgage rates, however Dr Chandan is confident the Treasury will recognize this effect in time and alter its course of action.

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Posted by: Nina Turner

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