U.S. dealers see more private-label mortgage security demand -Fed survey

WASHINGTON, April 3 Thu Apr 3, 2014 2:09pm EDT

WASHINGTON, April 3 (Reuters) - Big Wall Street firms have seen demand for private-label mortgage-backed securities pick up over the last few months, according to a survey released by the Federal Reserve on Thursday.

The data suggests private capital could be flowing more freely into the U.S. housing market, which has been largely propped up with capital from government-run companies since the 2007-09 recession.

The Fed's Senior Credit Officer Survey found that nearly one half of the biggest dealers in the market for dollar-denominated securities reported an increase in demand between December and February for funding of non-agency residential mortgage backed securities.

Government-run entities such as Fannie Mae and Freddie Mac supply capital for most U.S. mortgage lending by repurchasing loans made by banks and securitizing them.

Thursday's report could be a sign of increased lending with funds from private capital instead, a sign of risk appetite among investors as well as confidence in the U.S. economy. (Reporting by Jason Lange; Editing by James Dalgleish)

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