Fannie Mae said it made commitments in October to purchase $8.9 billion of mortgages - the highest monthly total this year and an indication of strong activity through yearend.
The high level of commitments reflected an increase in housing activity as interest rates fell, the Asian market collapsed, and investors' fled to the safety of Treasuries.
"There were a lot of good opportunities in October, given the volatility in the market," said Jayne Shontell, senior vice president for investor relations at Fannie Mae.
Analysts said that market conditions favor Fannie Mae's business, with homebuyers seeking fixed-rate mortgages and mortgage lenders seeking to sell them to protect themselves against the possibility of higher rates.
"The current level of interest rates is both very conducive to people buying homes and also refinancing existing mortgages," Ms. Shontell said.
Fannie Mae's net mortgage portfolio grew by 12.6%, to $310 billion, during October. Mortgage purchases totaled $7.6 billion and portfolio liquidations, $3.9 billion. Mortgage sales totaled about $500 million.
"Because of bond market volatility, there were opportunities to buy a lot of mortgages for a short period of time," said Steven Eisman, a research analyst at CIBC Oppenheimer Corp. "Spreads of new mortgage purchases have not widened that much overall."
Fannie Mae's total of mortgage-backed securities outstanding increased to $696.7 billion in October, representing a 10.1% annual growth rate. Excluding what Fannie Mae holds in its portfolio, mortgage-backed securities outstanding increased at a 7% annual rate, to $569 billion.
"The fact that the commitment level was so strong implies that November and December purchase activity will be pretty healthy as well," Ms. Shontell said.
Mortgage-backed securities issues totaled $14.7 billion and liquidations $8.9 billion.
Serious delinquencies on single-family homes for September remained at 0.59%.
Fannie Mae's net interest margin was 117 basis points in October.