Currently Reading

Fed Moves to Bolster Housing Markets

Advertisement

Fed Moves to Bolster Housing Markets


March 16, 2020
Facade of the Federal Reserve building
Image: stock.adobe.com

As more segments of the economy shut down over the weekend in an effort to slow the spread of coronavirus, the Federal Reserve unleashed a round of monetary policy stimulus, including the purchase of $200 billion in mortgage-backed securities and $500 billion of Treasuries.

Among the other moves was a cut in the federal funds rate to a top rate of 0.25%, reducing the discount rate from 1.25% to 0.25%, and boosting liquidity by slashing the reserved requirement for banks. 

For housing markets, the purchase of $200 billion of mortgage-backed securities was particularly important given the rise in mortgage interest rates last week that signaled a drop in investor ability or desire to purchase MBS. This action will help stabilize mortgage rates over the coming week, although more purchases of MBS will likely be required.

This was a necessary move by the nation’s central bank, and one that is supportive of housing markets. It is good that the Fed did not wait until Wednesday and acted before major markets opened on Monday, said the National Association of Home Builders’ (NAHB) in its Eye On Housing blog.

More support will be needed however, as forecasts – including the NAHB’s – expect economic growth to be markedly negative for the second quarter. The degree of growth in the third quarter and for 2020 as a whole will depend on whether current virus mitigation efforts are successful in flattening the curve for infection.
The Fed cannot do this alone.  Additional policy support will be needed in the areas of regulatory policy and fiscal stimulus to ensure small businesses and households are able to endure during this period of mitigation.

Read more

Related Stories

Government + Policy

Potential Cuts to Housing Aid Threaten Home Building Lobbying Efforts

Why federal housing aid might be put on the chopping block.

NAHB

Working to Improve Access to Affordable Housing

NAHB Policy Briefing | Urging the Biden administration to do more for affordable housing; multifamily growth in the suburbs and beyond

Government + Policy

Property Owners, Builders Push Back on Oregon’s Wildfire Plan

They worried broad restrictions would increase costs for property owners, home builders and farmers and infringe on private property rights.

Advertisement
Advertisement

More in Category




Advertisement
Advertisement

Create an account

By creating an account, you agree to Pro Builder's terms of service and privacy policy.


Daily Feed Newsletter

Get Pro Builder in your inbox

Each day, Pro Builder's editors assemble the latest breaking industry news, hottest trends, and most relevant research, delivered to your inbox.

Save the stories you care about

Lorem ipsum dolor sit amet lorem ipsum dolor sit amet lorem ipsum dolor sit amet.

The bookmark icon allows you to save any story to your account to read it later
Tap it once to save, and tap it again to unsave

It looks like you’re using an ad-blocker!

Pro Builder is an advertisting supported site and we noticed you have ad-blocking enabled in your browser. There are two ways you can keep reading:

Disable your ad-blocker
Disable now
Subscribe to Pro Builder
Subscribe
Already a member? Sign in
Become a Member

Subscribe to Pro Builder for unlimited access

Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.