The NY Fed purchased an additional net $8 billion in MBS for the week ending March 24th. This puts the total purchases at $1.248 trillion or 99.84% complete. Just $2 billion and one more week to go ...recall that the price of a loan is inversely related to yield (interest rates). Another way to think about this is that the supply of debt is declining (equivalent to demand for mortgages) which raises the price of debt (interest).
The Fed has been buying mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae since December 2008 to help drive down mortgage rates and spur a housing recovery. In addition to the $1.25 trillion in mortgage-backed securities, the Fed has soaked up $175 billion of the big mortgage firms' debt, which could be part of an asset-sales program.
Fed officials have been debating for several months whether to sell the assets as the economy heals. The large mortgage portfolio makes it harder for the Fed to manage short-term interest rates because buying the securities meant flooding the financial system with cash. Because of all that extra cash in the system, it might be hard to get banks to lend it out at higher rates when the Fed wants to raise them.
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