Fed Minutes: GSE MBS Buy Expansion Aimed at Sustaining Refis

The Federal Reserve expanded its purchases of GSE mortgage-backed securities by $750 billion in March to sustain the refinancing boom and keep mortgage rates low, according to the minutes of the last Federal Open Market Committee meeting. When the committee met in mid-March, the Fed was already on track to reach its initial target of purchasing $500 billion in Fannie Mae, Freddie Mac and Ginnie Mae MBS and $100 billion in GSE debt by the end of June. But committee members noted that the "pace of MBS issuance was likely to be especially brisk over the next few months, in part because of the Administration's new Making Home Affordable program," and they wanted to "accommodate the pattern of mortgage refinancing," the minutes say. So the committee agreed to expand the MBS purchase program to $1.25 trillion and extend it until the end of the year. The FOMC members said low mortgage rates, affordable housing prices and the Obama administration's new refinancing and loan modification programs could bring about a "sustained increase in home sales and a stabilization of house prices."