As reported by Bloomberg, the Federal Reserve bought $5 billion of Fannie Mae, Freddie Mac and Federal Home Loan Bank corporate debt under a new program aimed at reducing mortgage costs. Fed Chairman Bernanke finds it “encouraging” that his plan announced last week has already spurred a drop in loan rates.
Treasury Secretary Paulson is considering using purchases of home loan securities to force loan rates as low as 4.5 percent, a government official said on condition of anonymity. If true, this should allow more buyers into the market.
