"Federal Reserve Chair Jerome Powell recently addressed the National Association for Business Economics conference, indicating that the central bank would not intervene in secondary mortgage markets to ease mortgage rates, contrary to some suggestions for boosting homebuyer affordability. The discussion revolved around the Fed's efforts to reduce its significant holdings of securities, notably mortgage-backed securities (MBS), accumulated during the COVID-19 pandemic through quantitative easing measures."
"The Fed is not planning to directly intervene in secondary mortgage markets to lower mortgage rates. The central bank has been gradually reducing its MBS holdings acquired during the pandemic as part of quantitative easing. Some experts proposed reinvesting in MBS to lower mortgage rates, with potential reductions of up to 50 basis points. Powell rejects the idea of using MBS purchases to address mortgage rates, citing a focus on overall inflation rather than targeting housing prices."
Jerome Powell stated that the Federal Reserve will not intervene in secondary mortgage markets to lower mortgage rates. The Fed is reducing large holdings of securities, especially mortgage-backed securities (MBS), accumulated during COVID-19 quantitative easing. Some experts proposed reinvesting proceeds into MBS to lower mortgage rates by as much as 50 basis points. Powell rejected MBS purchases as a tool for targeting housing costs, emphasizing a focus on overall inflation control. The ongoing runoff of MBS holdings is viewed as a factor keeping mortgage rates elevated despite calls for more direct central bank action.
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