Industry NewsMortgage

Government’s MBS purchases keep lid on mortgage rates

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Mortgage rates stayed at or near record lows this week, as the Federal Reserve continued a program to buy up $40 billion in mortgage-backed securities issued by Fannie Mae and Freddie Mac each month.The government's open-ended MBS purchases -- part of a third round of quantitative easing ("QE3") announced by the Fed on Sept. 13 -- have helped push mortgage rates into record low territory. Most members of the Fed's Open Market Committee are expected to vote to maintain those purchases when they meet next week.But it remains to be seen whether the Fed will extend what's been dubbed "Operation Twist" -- monthly swaps of $45 billion in short-term Treasurys for long ones. Those purchases are scheduled to expire at the end of the year, and some Fed officials are pushing for them to be scaled back or eliminated.Some analysts think ending or scaling back Fed purchases of long-term Treasurys could dent economic growth and have repercussions for stock market investo...