Fannie Mae announced recently that its retained portfolio grew at about a 20% annualized rate -- which analysts said is about twice the pace of the MBS market. This and other factors point to an intensifying supply/demand imbalance for mortgage-backeds, they stated.

Fannie's net purchases of around $10.6 billion were similar to the net growth in the FNMA MBS market, according to a report by Credit Suisse First Boston. Analysts said, however, that it seems like approximately 40% of the net purchases were not in FNMA MBS. They anticipate net MBS production to continue to drop. Further, they said that it is becoming apparent that the amount of equity-take-out is declining and average loan balances on 2002 originations may be lessening compared to last year.

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