Poor demand sidelines Freddie Mac mortgage issue

Reuters reports on Freddie Mac:

one of the largest providers of financing for U.S. home mortgages, on Tuesday said it broke from its plan to sell one if its standard mortgage securities each quarter amid a glut of securities in the market.

The company, after consulting its Wall Street underwriters, found "market demand does not appear sufficient" to issue a Reference Real Estate Mortgage Investment Conduit, or Reference REMIC in September, Freddie Mac said in a statement. It would be the first quarter without at least one issue since the company started the program in April 2005.

Supply in the $7.2 trillion mortgage bond market over the past two months has ballooned as investors have cooled to purchases of even "AAA" rated securities. Mortgage bonds backed by loans without guarantees from Freddie Mac, Fannie Mae or the government suffered in particular, sending prices down to a point where they are now the best value in the market, UBS Securities analysts said in a recent research note.

I guess the marketplace isn't enamored by the implied guarantee that Freddie Mac has from the federal government.