Thursday, January 8, 2009

Fed Bought $10.2 bil Agency MBS

Jan. 8 (Bloomberg) -- The Federal Reserve bought $10.2 billion of Fannie Mae, Freddie Mac and Ginnie Mae mortgage- backed securities under a program aimed at lowering home-loan rates begun this week. The biggest portions of the purchase were $3.45 billion of 30-year bonds with 4.5 percent coupons and $3 billion of 30-year debt with 5 percent coupons, according to the New York Fed’s Web site. The central bank has said it plans to buy $500 billion of so-called agency mortgage bonds by June 30 under the program. The government is seeking lower loan rates to help curb the U.S. housing slump that’s sparked a global recession. The average rate on a 30-year fixed-rate mortgage dropped for a 10th week to 5.01 percent in the period ended today, the lowest on record, according to McLean, Virginia-based Freddie Mac. The rate may fall to about 4.5 percent, according to Bill Gross, co-chief investment officer at Pacific Investment Management Co.

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