A Puzzle

Okay, here’s a question that I don’t know the answer to.  Why are current coupon Ginnie Mae MBS yielding roughly the same as Fannie Mae MBS?  THe Ginnie Maes are government guaranteed, so they should have a lower cost of funds.  Why isn’t the spread bigger?

I write this because there are many who think that folding Fannie and Freddie into the US Government could lower their funding costs, and lower mortgage rates. Well, Ginnie Mae is already there, and it does not seem to be making much difference. The Feds could have put the pedal to the metal with Ginnie Mae, but there does not seem to be much advantage, and I don’t know why.