The risk premium on Fannie Mae and Freddie Mac mortgage bonds has dropped to a record low even though the Federal Reserve is poised to end its market support for these bonds later this month.
The spread on the 30-year Fannie Mae current coupon bond – a benchmark for the sector – this week fell to 57 basis points over US Treasuries, the lowest ever, according to Mahesh Swaminathan, mortgage strategist at Credit Suisse.
