If the current pace of GNMA MBS growth continues, then the outstanding balance of these securities could reach $1 trillion by the end of 2010, according to Bank of America/Merrill Lynch analysts in a recent report.

In making this projection, the analysts looked at the growth of the GNMA sector since 2Q06, when the outstanding balance of GNMA securities was $360 billion, to 2Q09, when it grew to $680 billion. In this past year alone, the GNMA market experienced a 50% annual growth rate.

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