Fed’s Mortgage-Backed Securities Purchase Program to Begin in January
Posted by rawfinance on December 31, 2008
The Federal Reserve Board’s program to purchase mortgage-backed securities (MBS), previously announced on November 25, 2008, will begin operations in January, according to a statement released by the Fed on December 30, 2008. The program seeks to support the damaged mortgage and housing markets by purchasing MBS guaranteed by government-sponsored entities Fannie Mae, Freddie Mac, and Ginnie Mae. The government’s MBS purchase should also improve the financial markets in general by freeing capital that is currently tied up in MBS.
According to a Bloomberg.com article, the Fed has chosen BlackRock Inc., Goldman Sachs Asset Management, Pacific Investment Management Co. and Wellington Management Co. to manage the $500 billion purchase of MBS.
Details of the Fed’s MBS purchase program may be read here.
In addition, mortgage rates have dropped recently on the news of this program, and the implementation of the program should result in a further rate reduction. Current mortgage rates, according to Bankrate.com are:
| NATIONAL OVERNIGHT AVERAGES | TODAY | +/- | LAST WEEK |
| 30 yr fixed mtg |  |
5.30% |  |
5.37% |
| 15 yr fixed mtg | |
5.12% | |
5.27% |
| 5/1 ARM | |
5.86% | |
5.88% |
| 30 yr fixed jumbo mtg | |
6.98% |  |
6.96% |
| 5/1 jumbo ARM | |
5.90% | |
6.01% |
