Fannie Mae Mortgage Bonds Drop Most This Year on Refinancing

Fannie Mae and Freddie Mac mortgage bonds tumbled, with prices for certain debt falling the most relative to Treasuries this year, on concern that refinancing will accelerate after the Federal Reserve said it would buy more government notes to restrain borrowing costs.

Fannie Mae’s 30-year fixed-rate mortgage securities with 4.5 percent coupons declined 0.47 cent on the dollar to 104.28 cents as of 5 p.m. in New York, a drop of 0.39 cent relative to Treasuries, according to data compiled by Bloomberg. The bonds, whose underlying loans’ rates average about 5 percent, reached a record 104.97 cents on Aug. 10.