The Federal Reserve announced a massive new program today to buy mortgage-backed securities. Up to $500 billion in funds will be used to buy mortgage-backed securities backed by Fannie Mae, Freddie Mac and Ginnie Mae and up to $100 billion in funds will be used to buy up debt issued by those housing agencies.
"This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved financial conditions more generally." The Fed said in their statement.
This latest step strikes at the heart of the current financial crisis, which is the struggling housing market. Mortgages are staging a huge rally in response to the news, and we hope to see interest rates fall significantly as a result.
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