Signs of success in Fed's Fannie, Freddie programs | Reuters

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Signs of success in Fed's Fannie, Freddie programs

By Kristina Cooke and Lynn Adler

NEW YORK (Reuters) - With a third of the Federal Reserve's $100 billion program to buy Fannie Mae, Freddie Mac and the Federal Home Loan Banks' debt and more than a quarter of its $500 billion agency mortgage backed securities buys now completed, there are some signs of success.

Mortgage rates have fallen, boosting applications not only to refinance home loans and lower monthly payments, but even for new home buyers.

Freddie Mac's average 30-year loan rate was 5.04 percent in the past week, down a full percentage point from 6.04 percent since November.

"They've been successful at driving down primary mortgage rates. That's the objective of the Fed's MBS purchase program, to make housing finance more affordable," said Kevin Caron, a mortgage strategist at FTN Financial in Chicago.

Thursday's purchases bring the total agency debt the Fed has bought so far to $32.89 billion. On the agency side, the Fed in the past week bought $19.9 billion in agency mortgage-backed securities, MBS, bringing the total bought so far to about $135 billion.

"That takes pressure off of home owners from an economic standpoint because they get to lower their monthly mortgage payments for those who can qualify. That's a big caveat," ...

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