The Real Lender on Your Mortgage Could Be the Federal Reserve
The Fed is scarfing up a large share of all newly issued mortgage-backed securities.
Homes in Great Neck, N.Y.
Photographer: Johnny Milano/BloombergWhy, again, is the Federal Reserve adding $40 billion a month to its holdings of mortgage-backed securities when the mortgage market doesn’t seem to need any federal assistance?
After all, the national average for a 30-year fixed-rate mortgage loan is 3.02%, according to the latest survey by mortgage buyer Freddie Mac Corp. That’s up only a bit from the less than 2.7% in January and February, the lowest in records going back to 1971. Cheap loans are fueling a historic rise in home prices that’s making homeowners rich on paper but crushing would-be first-time buyers: The S&P CoreLogic Case-Shiller index of U.S. property values climbed 14.6% in April from a year ago, the biggest gain in data going back to 1988.