US Federal Reserve Zones in On Mortgages

In an attempt to help alleviate the continued debt crisis in the US, US Federal Reserve head Ben Bernanke vowed to do everything he can to help the US economy back on track.

This move comes after European Central Bank (ECB) president, Mario Draghi has announced that the ECB is ready to purchase unlimited numbers of bonds from the different eurozone states.  This shall help alleviate the borrowing costs of the struggling states.

The Federal Reserve shall become very active in acquiring securities from mortgage.  It is set that a monthly budget of US$40 billion shall be allotted for the bond-buying program.  Furthermore, Mr. Bernanke in a statement said that the Federal Reserve shall be aggressive in finding ways to improve the economic climate should this stimulus do not reflect any improvement.  Although he admits that such actions would not provide solve all the nation’s problems, he promised though that the Federal Reserve shall provide support in whatever way they can.

With this move, the Federal Reserve will ease the pressure on the mortgage bond yields which will cause lower mortgage rates.  Hopefully, those who are looking to buy homes or those who would like to refinance their mortgages will be motivated to do business.

HSBC’s US economist, Kevin Logan is expectant that with such move, there will be much activity in the housing sector and if sustained in a year, it can be projected that 10 per cent will be eradicated from the current mortgage-backed securities.  Data shows that the US economy is on a two per cent growth rate a year.