Liquidity in the Mortgage Market: How does the COVID-19 Crisis Compare with the Global Financial Crisis?

Karen Pence

No 2022-039, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: The liquidity strains that contributed to the meltdown of the mortgage market in the Global Financial Crisis (GFC) re-emerged in the Coronavirus 2019 (COVID-19) Crisis. Some of these strains were acute. For example, the dependence of mortgage real estate investment trusts (REITs) on short-term funding amplified market disruption in March 2020. However, other liquidity pressures had only minor repercussions for the overall mortgage market because of reforms since the GFC, a heavy government presence, and strong house prices. The lackluster performance of the private-label mortgage-backed securities market provides a glimpse of how the market might have performed in the absence of the heavy government presence.

Keywords: COVID-19; REIT; Term Asset-Backed Securities Loan Facility (TALF); Mortgage market; Mortgage servicers; Mortgage-backed securities (MBS) (search for similar items in EconPapers)
JEL-codes: G21 G23 G28 (search for similar items in EconPapers)
Pages: 31 p.
Date: 2022-06-23
New Economics Papers: this item is included in nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Journal Article: Liquidity in the mortgage market: How does the COVID‐19 crisis compare with the global financial crisis? (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2022-39

DOI: 10.17016/FEDS.2022.039

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