Fed begins to buy up mortgages as investors become interested in mortgage backed securities
by Snets ~ January 13th, 2009. Filed under: Blog.The Fed has begun buying up fixed rate mortgages backed by Fannie Mae, Freddie Mac and Ginnie Mae from lending institutions. This is part of a $500 billion plan announced on November 25th. The Fed estimates that it will complete the massive buy out by June 30th which is an astoundingly quick turn around. Will this free up credit? Perhaps. Comparisons to plans implemented during “The Great Depression” abound but never has so much capital been thrown at a financial crisis.
The first purchase by the Fed last week in the amount of $10 billion has also sparked investor interest in mortgage backed securities as well as corporate bonds, lowering yields to the lowest they’ve been since September. What does this mean for Florida mortgages? It may signal a thaw in the credit market and it may mean that more capital will be available to borrowers/buyers in the market.
We can only hope that this trend continues and that it helps to push rates lower. The Fed has made money cheap, what’s been missing is a willingness on the part of banks to follow suit and to lend it.
