Rates of Return on GNMA Securities: The Cost of Mortgage Funds

This paper examines rates of return earned on GNMA securities over the period January 1971 through June 1978. We find that over this period the mean monthly return on GNMAs was greater than the mean return on long-term government bonds and slightly greater than the mean return on high-grade corporate bonds. However, in neither case was the difference statistically significant. Thus, based on this evidence, it is not possible to conclude that the cost of acquiring funds to finance single-family housing purchases through the GNMA program exceeded the cost of acquiring funds by the U.S. treasury or financially-strong corporations.