Liquidity in the Mortgage Market: How does the COVID-19 Crisis Compare with the Global Financial Crisis?
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.
File(s): File format is application/pdf https://www.federalreserve.gov/econres/feds/files/2022039pap.pdf
Part of Series: Finance and Economics Discussion Series
Publication Date: 2022-06-23