Friday, July 24, 2009
Fed bought another $48 billion of Mortgage-Backed Securities in the latest week
Total MBS held now is $537 billion and their goal is to buy up to $1.25 trillion by the end of the year. In the past month the Fed has bought $70 billion of MBS and the 30-year mortgage rate has come down 120 basis points. (Anyone sitll think the Fed doesn't set rates??)
If they meet their target mortgage rates will be a lot lower than where they are today--a lot lower! Think about it...they bought $70 billion MBS and the rate came down by over a percent. What if they bought 10 times that amount!!!
The key question is...whether or not they will actually go ahead with their full, stated, goal. So far they have repeated several times that they were going to do it. We must take them at their word until we hear otherwise.
Here is the Fed's weekly statement.