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The Fed Now Owns Nearly One Third of All US Mortgages


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2020 Sep 2, 8:48pm   644 views  5 comments

by Patrick   ➕follow (55)   💰tip   ignore  

https://www.thestreet.com/mishtalk/economics/the-fed-now-owns-nearly-one-third-of-all-us-mortgages

As of August 26, 2020 the Fed's Balance Sheet is nearly $7 trillion total of which $3.7 trillion are notes or bonds, and nearly $2 trillion in mortgages (Fannie Mae, Freddie Mac, or Ginnie Mae).

No End in Sight to Fed's Mortgage Buying Spree

Bloomberg reports No End in Sight to Fed's Mortgage Buying Spree.

Key Points

The Fed has snapped up $1 trillion of mortgage bonds since March. It bought around $300 billion of the bonds in each of March and April, and since then has been buying about $100 billion a month.
The Fed now owns almost a third of bonds backed by home loans in the U.S.
Buying the securities has pushed mortgage rates lower, with the average 30-year rate falling to 2.91% as of last week from 3.3% in early February.
Morgan Stanley analysts pointed out in late March that the buying was running at eight times the pace seen in prior episodes of Fed purchasing under programs known as quantitative easing.
Just before this latest round, principal payments from its mortgage bond holdings had whittled that down to 21%, but it has now increased back to 30%.
If the Fed maintains its current buying pace, it will again own 34% of the mortgage universe by year’s end.

Comments 1 - 5 of 5        Search these comments

1   AD   2020 Sep 2, 11:45pm  

Yep, they are trying to dampen the pandemic effects on the housing market (and mortgage industry).

17% of FHA’s approximately 8 million loans were delinquent in July 2020

https://www.aei.org/research-products/report/nowcast-10-metros-most-threatened-by-high-numbers-of-fha-delinquencies-based-on-fha-july-2020-delinquency-rates-data/
2   HeadSet   2020 Sep 4, 3:00pm  

TrumpingTits says
I didn't know that NAR had goons on the Fed Board.

...then again, I shouldn't be surprised.


NAR? Seriously? True, NAR have a vested interest in keeping home loans available, but the banks are the ones who are really on the hook here. NAR does not need goons when the much larger banker goons will carry the water anyway.
3   steverbeaver   2020 Sep 5, 1:34am  

How the hell is an entity that prints money out of thin air allowed to own any real assets!?
4   AD   2020 Sep 5, 8:48am  

TrumpingTits says
That means when the music stops, some ppl are left w/o a chair.


The spectacle is technically sustainable if the working class is able to comfortably survive.

That depends on the supply and costs of housing, food, energy and health care.

Government creates demand but can easily destroy supply. Just examine Venezuela's oil industry since Hugo Chavez was elected.
............................
5   HeadSet   2020 Sep 5, 7:18pm  

And what would have happened financially to NAR's masters if the Fed didn't buy those mortgages?

House prices would fall to more affordable levels. Banks would get killed, but Realtors would still make money from sales, although lower commissions totals per unit.

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