unemployment

Topics: Mortgage, Mortgage loan, Subprime mortgage crisis Pages: 1 (267 words) Published: July 11, 2014
The mechanism is as follows: Fannie and Freddie buy mortgages from banks and resell them to investors; the higher the price that investors are willing to pay, the lower the rate that a person taking out a mortgage will have to pay. If buyers are unwilling to buy Fannie and Freddie paper than people who want to get mortgages will pay higher rates; but if the Fed aggressively buys this paper, then mortgage rates will come down. So the Fed was trying to lower mortgage rates through its actions.The mechanism is as follows: Fannie and Freddie buy mortgages from banks and resell them to investors; the higher the price that investors are willing to pay, the lower the rate that a person taking out a mortgage will have to pay. If buyers are unwilling to buy Fannie and Freddie paper than people who want to get mortgages will pay higher rates; but if the Fed aggressively buys this paper, then mortgage rates will come down. So the Fed was trying to lower mortgage rates through its actions.The mechanism is as follows: Fannie and Freddie buy mortgages from banks and resell them to investors; the higher the price that investors are willing to pay, the lower the rate that a person taking out a mortgage will have to pay. If buyers are unwilling to buy Fannie and Freddie paper than people who want to get mortgages will pay higher rates; but if the Fed aggressively buys this paper, then mortgage rates will come down. So the Fed was trying to lower mortgage rates through its actions.
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