June 2022

Liquidity in the Mortgage Market: How does the COVID-19 Crisis Compare with the Global Financial Crisis?

Karen M. Pence


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.

Accessible materials (.zip)

Keywords: COVID-19, REIT, Term Asset-Backed Securities Loan Facility (TALF), mortgage market, mortgage servicers, mortgage-backed securities (MBS)

DOI: https://doi.org/10.17016/FEDS.2022.039

PDF: Full Paper

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Last Update: August 01, 2022