Housing Boom Fuels Bets Fed Will Taper Mortgage Bonds First
- With home prices rising, case for Fed support weakens
- ‘The Fed is going to take a different approach this time’
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When the Federal Reserve starts scaling back its massive bond-buying spree, mortgage traders are betting their market will be at the forefront.
That would be a break from the Fed’s balanced approach during its last pullback in 2014, when it slowed purchases of Treasuries and mortgage-backed securities at the same pace. But with housing prices now surging and lending rates not far from record lows, some see a diminishing case for the central bank to keep adding $40 billion of mortgage bonds to its balance sheet each month.