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Dead wrong. Selling MBS affects the incentives of mortgage initiators in a vastly different way than selling Bonds. It's a direct pipeline to affecting bottom l
by anm89 4y ago
Dead wrong. Selling MBS affects the incentives of mortgage initiators in a vastly different way than selling Bonds. It's a direct pipeline to affecting bottom line mortgage rates for consumers as opposed to a highly indirect one. When bottom line mortgage rates for consumers go up, the housing market is affected directly and immediately.
- javert 4y agoI don't see why that would be the case. Enlighten me. If the market will pay yield X for a long-term bond of a certain duration, banks can make money by offering mortgages for X plus some margin. The Fed selling MBSs should just depress yields in general.