U.S Housing: The Future of Mortgage Markets

This podcast episode discusses the implications of the FDIC's liquidation of $114 billion in agency mortgages on the mortgage market. The market is liquid and can quickly adjust to this news, but the size of the liquidation is significant. The composition of the mortgages being liquidated, with their low fixed coupons and structured nature, makes them less desirable for money managers and banks, respectively. As a result, banks are expected to be less active in the mortgage market, leaving money managers and overseas investors as the main buyers. This marks a shift in the mortgage market landscape, as neither domestic banks nor the Fed will be net buyers of mortgages for the first time since 2009.