DEFINITION of 'Agency MBS Purchase'

The purchase of mortgage-backed securities issued by government-sponsored enterprises such as Ginnie Mae, Fannie Mae or Freddie Mac. The term is most commonly used to refer to the U.S. Federal Reserve's $1.25 trillion program to purchase agency mortgage-backed securities, which commenced on Jan. 5, 2009 and was completed on Mar. 31, 2010.

BREAKING DOWN 'Agency MBS Purchase'

The goal of the Federal Reserve's $1.25 trillion agency MBS purchase program was to provide support to mortgage and housing markets, and also to foster improved conditions in financial markets. When the Federal Reserve commenced these purchases in January 2009, the U.S. and global equity markets were trading at multi-year lows amid an intense credit crunch, and widespread concern about the global economy heading for a depression.

The MBS purchase program was instrumental in providing price support to these securities and dissipating the panic that had gripped many market participants. By the time the Federal Reserve completed the purchase program in March 2010, the S&P 500 had appreciated more than 75% from its March 2009 low and global equity markets had been in full rally mode for over a year, perhaps exceeding the Fed's most optimistic expectations.

RELATED TERMS
  1. Mortgage Pool

    A group of mortgages held in trust as collateral for the issuance ...
  2. Fannie Mae - Federal National Mortgage ...

    A government-sponsored enterprise (GSE) that was created in 1938 ...
  3. Agency Swap Program

    A form of securitization whereby single-family residential mortgages ...
  4. Federal Housing Finance Agency ...

    A U.S. government agency created by the Housing and Economic ...
  5. MBS Pool Number

    A number or alphanumeric character assigned to a mortgage-backed ...
  6. Current Face

    The current par value of a mortgage-backed security (MBS). Current ...
Related Articles
  1. Investing

    Fannie Mae and Freddie Mac, Boon Or Boom?

    These two companies are crucial to the mortgage market, but are they ticking timebombs?
  2. Investing

    Should You Invest In Fannie Mae Stock?

    If you're risk-adverse, you might want to avoid investing in Fannie Mae. But if you're up for it, high risk could translate to high reward.
  3. Investing

    PTRIX,FMSFX,VMBSX: Profiting Off of Increased Mortgage Rates

    Learn why mutual funds that invest in mortgage-backed securities (MBS) are worth a look for investors wanting to capitalize on rising mortgage interest rates.
  4. Insights

    Fannie Mae, Freddie Mac And The Credit Crisis Of 2008

    Is the U.S. Congress' failure to rein in these mortgage giants to blame for the financial fallout?
  5. Investing

    The ABCs of Mortgage-Backed Securities ETFs

    ETFs focused on mortgage-backed securities, or MBS, offer an opportunity to further diversify the fixed-income portion of your portfolio.
  6. Insights

    How Fannie Mae And Freddie Mac Were Saved

    These mortgage giants had to be put under government conservatorship, driving home the gravity of the subprime crisis.
  7. Personal Finance

    Why Fannie Mae And Freddie Mac Might Be In Trouble

    Fannie Mae and Freddie Mac are under increased scrutiny as debates continue about conservatorship, share price, and profit allocations.
  8. Investing

    The Top 5 Fannie Mae Shareholders (FNMA)

    Find about the individuals, funds and companies that are top shareholders of Fannie Mae stock. Learn about their profiles and their relationships with Fannie Mae.
  9. Investing

    VBMFX: Overview of World's Largest Bond Mutual Fund

    VBMFX: Find out top positions in the world's largest bond fund, the Vanguard Total Bond Market Index Fund.
  10. Investing

    Top Mortgage-Backed Securities ETFs

    Investing in mortgage-backed securities has many advantages, but studying their history may make you wary.
RELATED FAQS
  1. Are mortgage-backed securities backed by any guarantees?

    Actually, any mortgage-backed security (MBS) guarantee depends on who issued it.To review, an MBS is a security, created ... Read Answer >>
  2. What are the best ways to invest in mortgage-backed securities (MBS)?

    Find out how you can start investing in real estate through mortgage-backed securities. Read Answer >>
  3. How does Fannie Mae (FNMA) make money?

    Fannie Mae is a government-sponsored enterprise (GSE) established in 1938 to expand the flow of mortgage money by creating ... Read Answer >>
  4. What is a Ginnie Mae security?

    A Ginnie Mae, or Government National Mortgage Association security, functions similarly to the process of lending someone ... Read Answer >>
  5. How do you use the FNMA selling guide?

    Learn about Fannie Mae Selling Guide and find out details about how its parts provide support to the business relationship ... Read Answer >>
Hot Definitions
  1. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  2. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  3. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  4. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  5. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  6. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
Trading Center