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TBA trading and liquidity in the agency MBS market

Author Info

Listed author(s):
  • James Vickery
  • Joshua Wright

Abstract

Most mortgages in the United States are securitized through the agency mortgage-backed-securities (MBS) market. These securities are generally traded on a “to-be-announced,” or TBA, basis. This trading convention significantly improves agency MBS liquidity, leading to lower borrowing costs for households. Evaluation of potential reforms to the U.S. housing finance system should take into account the effects of those reforms on the operation of the TBA market.

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Paper provided by Federal Reserve Bank of New York in its series Staff Reports with number 468.

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Date of creation: 2010
Handle: RePEc:fip:fednsr:468
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Keywords: Mortgages ; Mortgage-backed securities ; Liquidity (Economics) ; Housing - Finance ; Financial market regulatory reform;

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