Next, let's look at MBS. Below is a table showing the balance of agency MBS held by public institutions and the amount of agency MBS held by the private sector. (Again, Fed holdings are as of the last Wednesday of December).
The Fed's share of total agency MBS outstanding reached a year-end high of 32% at the end of 2021, and was still above 27% at the end of last year. Again, the Fed's MBS purchases are essentially taking long-maturity, fixed-rate MBS held by the public and „replacing“ them with the Fed's very short-term reserves/deposits, while the private sector The amount of government debt held does not decrease. However, the maturity/duration of government debt owed by the private sector will be significantly reduced.
Calculating the impact of Fed MBS purchases on the maturities of government debt held by the private sector is more important to MBS than to the Treasury because the expected weighted average maturity/term of MBS is highly dependent on its relative relationship to interest rates. It is more difficult. About the mortgage that backs MBS.