Stop Mortgage Backed Secutities

Fed to Stop purchasing Mortgage-backed securities

The Fed program to buy mortgages will end on March 2010 is sparking fears that mortgage rates could rise and knock the frail housing recovery off course.

Investors are looking to Fannie Mae and Freddie Mac to play an expanded role in the mortgage-backed instruments market to help keep the market liquid and mortgage rates low.
The Federal Reserve has spent $1.25 trillion to buy up mortgage-backed securities from banks and loan corporations since Sep 2008. The purchase program helped boost the cost of mortgage securities and pushed down mortgage rates.

Average mortgage rates slid to 4.71% in late 2009. 30-year fixed-rate mortgages have risen by a quarter of a p.c.

property execs, contractors, home builders, mortgage consultants, and housing related professions will see a leveling off in business as higher mortgage rates will lead to less home sales and home construction.