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Fed Purchases $33B in MBS

""The New York Federal Reserve Bank"":http://www.newyorkfed.org purchased $33.15 billion in ""mortgage-backed securities"":http://www.newyorkfed.org/markets/mbs/index.html (MBS) from government agencies this week. Total MBS purchases since the Fed program began in early January now stands at $270 billion.
At its monthly policy meeting last Wednesday, the U.S. central bank announced that it plans to raise the amount of its MBS purchases to a total of $1.25 trillion for the year. The previous commitment was for $500 billion. The Fed also said it will double its purchases of debt from Fannie Mae and Freddie Mac this year, bringing total debt purchases to $200 billion, and will purchase up to $300 billion of longer-term Treasury securities over the next six months.
On Friday, the central bank's New York branch made its initial buy of these ""Treasury securities"":http://www.newyorkfed.org/markets/pomo/display/index.cfm, with the purchase price totaling $7.541 billion.
The Fed's aggressive plans to buy up more debt in support of mortgage lending and housing markets led to new record-lows in both long-term fixed and five-year adjustable mortgage rates this week. According to Freddie Mac's ""weekly survey"":http://www.freddiemac.com/pmms/release.html, mortgage rates across the board are now well below the five percent mark.
The central banks' expanded debt purchases are expected to drive rates even further and keep them low through the remainder of 2009. Many analysts argue that this will be a critical factor to absorb the inventory-surplus of unsold and foreclosed homes.
The gross amount of the Federal Reserve's MBS purchases this week totaled $47.25 billion. The Fed bought $32.55 billion in mortgage securities from ""Fannie Mae"":http://www.fanniemae.com, $13.45 billion from ""Freddie Mac"":http://www.freddiemac.com, and $1.25 billion from ""Ginnie Mae"":http://www.ginniemae.com.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.

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