Staff Reports
TBA Trading and Liquidity in the Agency MBS Market
2014 August 2010 Number 468
JEL classification: G21, G12, G19

Authors: James Vickery and Joshua Wright

Most mortgages in the United States are securitized through the agency mortgage-backed-securities (MBS) market. These securities are generally traded on a “to-be-announced,” or TBA, basis. This trading convention significantly improves agency MBS liquidity, leading to lower borrowing costs for households. Evaluation of potential reforms to the U.S. housing finance system should take into account the effects of those reforms on the operation of the TBA market.

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