"...Now, less than 18 months after the mortgage markets went into a tailspin, a sense of calm has returned to a key part of the $14,000bn market of outstanding US home loans: the more than $5,000bn of mortgage-backed securities sold by government-backed mortgage corporations Fannie Mae and Freddie Mac.
This so-called “agency MBS” market has been supported for more than a year by the presence of a huge buyer in the form of the Federal Reserve. By the end of this month it will own $1,250bn in bonds, or slightly less than a quarter of the market.
But the Fed’s buying will end next week, on March 31, meaning this vital cog in the US housing system is entering a period of uncertainty.
The purchases – part of the Fed’s “quantitative easing” programme – have played a vital role in stemming the effects of the financial crisis on the US economy. .."
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