Fed Purchases $20B in Agency MBS

The ""New York Federal Reserve Bank"":http://www.newyorkfed.org/index.html purchased $20 billion in mortgage-backed securities (MBS) from government agencies ""last week"":http://www.newyorkfed.org/markets/mbs/. Total MBS purchases since the Fed program began in early January now stands at $237 billion.
At its monthly policy meeting last Wednesday, the U.S. central bank ""announced"":http://www.federalreserve.gov/newsevents/press/monetary/20090318a.htm that it plans to raise the amount of its MBS purchases to a total of $1.25 trillion for the year. The previous commitment was for $500 billion. The Fed also said it will double its purchases of debt from Fannie Mae and Freddie Mac this year, bringing total debt purchases to $200 billion, and will purchase up to $300 billion of longer-term Treasury securities over the next six months.
Even before the Fed's aggressive plans last week to buy up more debt in support of mortgage lending and housing markets, mortgage interest rates had been flirting with record lows, with long-term rates dipping below five percent. The central banks' expanded debt purchases are expected to drive rates down even further.
But perhaps even more significant than the immediate effect on mortgage rates is the intent of the Fed to keep mortgage rates low through the remainder of 2009, a critical factor in getting home buyers into the market to absorb the inventory of unsold and foreclosed homes.
The gross amount of the Federal Reserve's MBS purchases last week totaled $28.195 billion. The Fed bought $13.145 billion in mortgage securities from Freddie Mac, $11.65 billion from Fannie Mae, and $3.4 billion from Ginnie Mae.