Fed MBS Purchase Program
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I'm at a dilemma, and can't seem to get a straight answer so maybe if this intrigues anyone here, they might be better digging for information than me. I wrote the Fed an email, but they're not being helpful. Here is my email:
According to your website, "On Wednesday, March 18, the FOMC announced the
expansion of the Federal Reserve's program to purchase agency MBS to a
total of $1.25 trillion by the end of the year." Does this pertain to
purchases only, or current value of your holdings? The Fed has purchased
$1.208 trillion worth of Agency MBS, but have sold $371+ billion. So I
would like to know if the Fed only has $42 billion left to purchase, or if
it's a a different value, what that value is.
This leads me to my second question:
Total Purchases of Agency MBS has been $1.208 trillion and sales has only
been $371.953 billion which makes the net purchases $836.452 billion. This
differs from the current value claimed by the Fed which is $625.278
billion. What happened the the difference between the $836+ billion and the
$625+billion current value? Has there been a loss so far?
I'm very interested in these answers, and so should any homeowner. If the fed only has $42 billion left to purchase MBS then you can expect rates to triple (guess) VERY VERY SOON as opposed to far away as most people think. This purchase program was designed to go until the end of 2009, and popular notion thinks it's going to be extended into 2010. I just want to know what to prepare for.
Some history: The first column is total MBS Purchased, the second is total MBS Sold, and the third is the net difference between the two. All numbers in millions.
According to this website, current value is $625+bil, not the 836bil below.
http://www.newyorkfed.org/markets/soma/sys...ccholdings.html
Copy and paste this into excel for a better look.
1/7/2009 10213 0 10213
1/14/2009 23405 0 33618
1/21/2009 19009 0 52627
1/28/2009 16837 0 69463
2/4/2009 22277 0 91740
2/11/2009 23220 0 114960
2/18/2009 19867 0 134827
2/25/2009 24999 0 159826
3/4/2009 58999 28850 189975
3/11/2009 61378 34274 217079
3/18/2009 28195 8520 236754
3/25/2009 47250 14100 269904
4/1/2009 68500 35590 302814
4/8/2009 74705 44280 333239
4/15/2009 30400 8650 354989
4/22/2009 41450 15250 381189
4/29/2009 59565 36423 404331
5/6/2009 73895 48525 429701
5/13/2009 35575 8425 456851
5/20/2009 25520 845 481526
5/27/2009 33400 7856 507070
6/3/2009 27675 1843 532902
6/10/2009 54680 31665 555917
6/17/2009 23075 2785 576207
6/24/2009 23750 1500 598457
7/1/2009 36150 13050 621557
7/8/2009 23250 6200 638607
7/15/2009 22980 810 660777
7/22/2009 21245 120 681902
7/29/2009 20168 18 702052
8/5/2009 19150 0 721202
8/12/2009 27069 6669 741602
8/19/2009 26640 1640 766602
8/26/2009 25825 425 792002
9/2/2009 25650 0 817652
9/9/2009 32440 13640 836452
....Thoughts?
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MBS = Mortgage Backed Securities.
According to Investopedia:
When you invest in a mortgage-backed security you are essentially lending money to a home buyer or business. An MBS is a way for a smaller regional bank to lend mortgages to its customers without having to worry about whether the customers have the assets to cover the loan. Instead, the bank acts as a middleman between the home buyer and the investment markets.
This type of security is also commonly used to redirect the interest and principal payments from the pool of mortgages to shareholders. These payments can be further broken down into different classes of securities, depending on the riskiness of different mortgages as they are classified under the MBS.
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