Skip to content

September 13, 2012

Fed to buy $40 billion in mortgages per month to aid real estate recovery, economic development

by Rylan Stewart
Federal Reserve

The U.S. Federal Reserve has announced its latest action to stimulate the economy: it will purchase $40 billion in mortgage backed securities per month. It will also continue with its “operation twist”, in which it swaps short-term government bonds for long-term securities.

According to Fed Chairman Ben Bernanke, the Fed’s actions will stabilize the mortgage market, spur a real estate recovery, and keep a low interest rate environment. In total, the Fed will increase its longer-term holdings by about $85 billion per month.

The Fed is acting with its third round of Quantitative Easing, or bond buying, in response to slowed U.S. economic growth and its unemployment situation, which has remained stubbornly above 8 percent.

The program is “open ended”, giving the Fed the ability to act until it is satisfied that conditions have improved.

Stock markets jumped at the announcement, and the Dow is up over 100 points.

Action comes after weeks and months of speculation from the market about possible stimulus measures.

We will have more on this development, updated rates, and the take from Mortgage Matters hosts (and Central Coast Lending owners) Dan Podesto and Jason Grote as the day progresses.

 

Part 1: Fed Announces $40 per month bond buying program to aid economy

Part 2: Reactions to Fed stimulus mixed

Part 3: Fed program should push mortgage rates lower 

 

 

Central Coast Lending is a California mortgage brokerage based in San Luis Obispo County. With offices in San Luis Obispo, Morro Bay, Paso Robles, and Arroyo Grande, Central Coast Lending is the top source for Central Coast mortgage, real estate, and home loan needs. To see why using a broker offers lower rates and superior service, click HERE. For a free, hassle-free online pre-qualification click HERE or call 805.543.LOAN to talk to one of our expert loan officers.

We will delete comments containing inappropriate links, obscenities, hate speech, and personal attacks. Reader comments on CentralCoastLending.com are the opinions of the writer, not Central Coast Lending. For a list of forum rules, click HERE.

Leave a comment