There is power in
FOMC Press Conference, March 2020
Investment Opportunity in
a Fundamental Asset
The Agency MBS market is regarded by the Federal Reserve as a pillar of our financial system, and AGNC provides a liquid and efficient way for stockholders to gain exposure to this impactful asset class.
U.S. Housing Market Size
Agency MBS Market Size
Agency MBS Average Daily Trading Volume
The Agency MBS Lifecycle
The dynamic ecosystem between lenders, the Agencies, and investors such as AGNC is crucial to ensuring capital is available to facilitate U.S. homeownership.
Borrower applies for a mortgage loan from a bank or other lender to purchase or refinance a home
- Lender analyzes borrower’s financial information to evaluate credit quality and minimize risk of homeowner default on the mortgage.
- Borrower is approved for mortgage to buy or refinance the home if proper requirements are met, and the property serves as collateral to secure the loan.
Lenders transfer eligible mortgages to the Agencies, which bundle them into guaranteed securities known as Agency MBS
- Agencies Fannie Mae, Freddie Mac, and Ginnie Mae guarantee millions of conforming mortgages originated by U.S. lenders each year, which protects investors in the event that homeowners default on these loans.
- Each MBS represents a diversified pool of thousands of mortgages secured by residential properties across the U.S. that conform with the Agencies’ rigorous underwriting standards.
AGNC and other fixed income investors purchase pools of Agency MBS, which include an Agency-backed guarantee against default
- Agency MBS provide attractive yields for investors seeking steady income without default risk, such as banks, pension funds, ETFs, and REITs.
- MBS investors receive monthly distributions of the cash flows generated by principal and interest payments from the underlying pool of mortgages.
Investor capital cycles through this housing ecosystem, increasing the availability of financing to homeowners
- Investors’ capital used to purchase Agency MBS flows back to lenders, who then use the capital to originate more loans for other borrowers.
- As monthly cash flows are received, investors generate yield and actively reinvest capital into new Agency MBS pools, and the cycle continues.