Mortgage-Bond Market Roiled as Bernanke Report Fuels Speculation
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Fannie Mae and Freddie Mac mortgage bonds that guide home-loan rates gained while those backed by high-cost debt declined on speculation the U.S. government may boost efforts to aid the housing market.
Yields on Fannie Mae’s current-coupon 30-year fixed-rate mortgage securities, or those trading closest to face value, declined about 4 basis points to 84 basis points more than 10-year U.S. government debt as of 3:30 p.m. in New York, the tightest spread since May 19, according to data compiled by Bloomberg. The company’s 6.5 percent securities, whose underlying loan rates average about 7 percent, fell almost 0.2 cent on the dollar to about 111 cents, Bloomberg data show.