Mortgage Blog

FED hints that they may continue the MBS purchase after March.

Here is the article:

The Federal Reserve is on track to end its $1.25 trillion MBS purchase program by the end of this quarter, but a minority of Fed officials would be in favor of resuming buying if market conditions warrant. It "might become desirable" in the future to expand the residential mortgage-backed securities purchase program "if mortgage market functioning were to deteriorate," according to the minutes of the December Federal Open Market Committee meeting. The consensus view of the 10 FOMC members is that the improvement in home sales and stabilization in house prices will continue. But some members view the improvement as "quite tentative." And they are concerned "mortgage markets could come under pressure as the Federal Reserve's agency MBS purchases wind down," the FOMC minutes say. The Fed started the MBS purchase program last January and it is due to end March 31. The New York Federal Reserve Bank is gradually slowing the pace of MBS purchases to "promote a smooth transition in markets." The FOMC minutes also show a "few members" would like to extend the Term Asset-Backed Securities Lending Facility (TALF) past June 30 to help the CMBS market get back on its feet.