Investors are downplaying the effects of adjustments to Fannie Mae and Freddie Mac refinancing rules for so-called underwater homeowners after strategists speculated that the revisions will provide lenders less protection than expected. At the same time, rising interest rates on new home loans may drive banks to focus on qualifying homeowners with the highest-cost debt as fewer of the safest borrowers seek to lower their monthly payments.
About 894,000 loans have been refinanced under HARP, according to the Federal Housing Finance Agency, the independent regulator of Fannie Mae and Freddie Mac that says the volume may double by the end of 2013. President Barack Obama said the program would aid 4 million to 5 million homeowners as the initiative for non-delinquent borrowers was introduced in 2009.
Debt in the $5.4 trillion market for agency mortgage securities guaranteed by Fannie Mae, Freddie Mac or government- owned Ginnie Mae outperformed U.S. Treasuries by 44 basis points in October through last week, the most since December, according to Barclays Capital index data. The housing debt trailed U.S. government notes during each of the previous three months.
Related Blogs
