FRS got mortgage in its sight


Mortgage debts – sore subject for the USA, taking into account mortgage «touch» of that problems, which lead to Great Recession. Moreover, lately Fitch Agency notified that modified hypothecary credits are still source of risks for American banking system…

In 2008-2010 purchases index, weekly published by MBA (Mortgage Bankers Association of America), formed bearish trend, which in 2011-2012 was changed by flat. We can’t even dream about return of index to the levels, which are higher than four hundred points, where it was most of time in 2003-2007: the index can’t manage to come off from the level of two hundred points.

MBA purchase application index

US stock exchange indexes returned to record maximum levels. As a result MBA purchases index, which held up in the ranges, looks painful. But it does not testify to inaction of government amd Federal Reserve System. On the contrary, efforts of the FRS helped to lower hypothecary credit rates to record low. Fed undertakes QE3 With $40 Billion mortgage bonds monthly.

At the meeting on the 20th of March Federal Open Market Committee confirmed that central bank would keep purchasing mortgage bonds. After press-conference, at the next meeting chairman of the FRS Ben Bernanke announced that «terms of hypothecary crediting  (in the USA ) became too cruel». In the end of February in Congress having announced a report for half year he assured deputies that on the mortgage securities market there are no big problems, provoked by the policy of central bank.  At the same time Bernanke noted that there are a lot of hopeless hypothecary credits, but still its number is decreasing.

Other chairmen of American central bank support head of Fed. Thus, Janet Jelen expressed her opinion that the FRS supports home market by purchasing mortgage bonds than treasury bonds. And the Presindent of the Federal Reserve Bank of San Francisco Williams said that program of purchasing mortgage securities by central bank was «very effective», having underlined that there are not enough mortgage market turnovers for  American economy.

This topic is also important for White House. In February the President of the USA Barack Obama called the nation to take actions in order to improve refinancing of hypthecary credits.

However, in Fed there are some supporters of moving securities purchasing to Central bank. Thus, recently representative of the FRS Fisher announced that aims of this program are already achieved, and in May-June the regulator has to start gradually decrease it up to zero level in the end of year.

Here I want to warn investors once more against overestimated expectations concerning forthcoming QE3 ending. Despiet Fisher’s and his adherents’ call, kea members of the FRS keep guard about this idea. Home market – one of the main driver of recovery of American economy . And in cruel conditions in the sphere of hypothecary crediting, the Fed will more likely hurry to end Mortgage-Backed Securities Purchase Program.



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I have been friend with currency market since 2006. I hope that this friendship is not only useful to me, because over the years I have repeatedly provided analytical services to various companies and media outlets. I love fundamental analysis. Every day, I am convinced that the statistics is not boring numbers but fascinating reading, which, moreover, can predict the future. Technical analysis is also not neglected, especially as my hobby - finding effective algorithms for automated trading systems.