With the Federal Home Loan Bank (FHLB) of Chicago's recent announcement of impressive gains in the Mortgage Partnership Finance (MPF) program, some fingers are pointing to this factor as the primary reason for the current dearth of Ginnie Mae supply. However, other mortgage analysts say that the lack of issuance from this sector is typically the result of a refinancing wave that occurs in a strong housing market.
The meager GNMA supply levels are especially apparent when compared to issuance in conventional mortgages. Despite the steep rise in the issuance of conventional mortgages seen over the past several months - 30-year conventionals have averaged roughly $20 billion in monthly net issuance - GNMA supply has remained negligible, according to a recent report by Lehman Brothers. In fact the total outstanding in GNMAs has gone down during the past year, the report stated.