Home loan bonds without government backing have climbed from record or near-record lows since the government announced plans to finance purchases of the securities.
Prices have also risen for commercial mortgage bonds, but the Commercial Mortgage Securities Association said the government's efforts will not help that market unless buyers are offered longer financing terms.
Typical prices for so-called super-senior securities backed by prime jumbo home mortgages rose 4 cents last week, to roughly 67 cents on the dollar, according to a report Barclays Capital Inc. released Friday.
Similar bonds backed by option adjustable-rate mortgages climbed 2 cents, to 35 cents on the dollar.
Treasury Secretary Timothy Geithner announced the program to boost bids March 23. The initiative involves investments and financing for public-private funds, as well as Federal Reserve Board loans to bond buyers through an expansion of the Term Asset-Backed Securities Loan Facility.
"Since the much-awaited announcement about the Public-Private Investment Program to tackle legacy real-estate assets hit the news wires … there has been a significant rally in senior bonds," a team of Barclays analysts led by Ajay Rajadhyaksha wrote in the report.
Prices on the jumbo securities remain about 4 cents lower than they were a month earlier, and prices on option ARM bonds are roughly 5 cents lower, according to the report.
Super-senior securities backed by fixed-rate alternative-A loans climbed 4 cents from a week earlier but fell about 1 cent from a month earlier, to 46 cents on the dollar, Barclays said. Similar securities backed by alt-A ARMs with a few years of fixed rates climbed 2 cents from a week earlier but fell 1 cent from a month earlier, to 40 cents.
Paul Vanderslice, the co-head of the U.S. commercial mortgage-backed securities group at Citigroup Inc., said longer terms are critical to drawing investors in that market.
"If we have six- or seven-year assets, don't give us three years of financing. Give us something longer," he said on a conference call Monday held by the commercial mortgage trade group.
Christopher Hoeffel, the group's president, said on the call that Treasury Department and Fed officials have said they understand the loans may need to be longer than the three years available through Talf.
However, "at this point, nobody has committed to anything to us," he said.