Fannie Mae 10 Yr Treasury Spread update

02/12/2009 Items of note:

1. Spread between the Fannie 30 NRY and 10 Yr Treasury bond has narrowed to 1.68498%, with the average spread from 12/03/2007 to 02/12/2009 at 2.07888% and a -2 standard deviation at 1.62334%. Not much room remaining for the spread to fall. If the Treasury wants to get mortgage rates lower in the immediate future, we're going to need to see the rates on the 10 Yr Treasury fall.
2. One factor complicating the reduction in mortgage rates is the continued price adjustment increases being imposed by Fannie Mae and Freddie Mac. Why Fannie and Freddie are jacking up their fees right now, while the Federal Reserve and the Treasury are fighting tooth and nail to reduce rates, seems to be working at cross purposes, and not helping with the Treasury's and Federal Reserves goal of mortgage rate reduction. The upcoming price adjustment increases take effect on Monday (02/16/2009).