Bloomberg recently reported that a number of dealers expect the Fed to initiate a new round of MBS purchases, with the goal of pushing mortgage rates lower and giving a boost to the still-sickly housing market. The idea of more MBS purchases raises a host of critical issues, particularly with respect to an exit strategy. (An investor who holds more than $1 trillion of an asset class effectively becomes the market.) Nonetheless, I believe that a well-conceived program can positively impact mortgage rates and housing.

Recent policy initiatives by both the Fed and the Obama administration have been intended to lower mortgage rates and stimulate home purchases and refinancing activity. The Fed's recent Operation Twist was intended to put downward pressure on mortgage rates, while the revised HARP was created to help underwater homeowners take advantage of current low mortgage rates, allowing them to refinance their higher-rate loans and improve their monthly cash flows.

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