Borrowing costs for U.S. home buyers are poised to extend declines from the highest level in two years after the Federal Reserve unexpectedly refrained from slowing its debt buying and bolstered expectations for how long it will keep short-term interest rates at about zero percent.
Fannie Mae and Freddie Mac are set to auction as much as $17 billion of mortgage bonds they acquired before the real estate collapse to meet a regulatory directive, potentially straining demand at the same time the Federal Reserve considers a stimulus pullback.
Mortgage rates in the U.S., after increasing at the fastest pace in a decade, are poised to rise even further with Federal Reserve Chairman Ben S. Bernanke saying the central bank is ready to slow its purchases of Treasuries and bonds backed by housing loans.
Three years after the collapse of Bear Stearns Cos., which helped fuel the worst financial crisis since the Great Depression, former bond executives of the firm are running businesses at one-time rivals, including Bank of America Corp. and Goldman Sachs Group Inc.
The Federal Reserve Bank of New York joined with the biggest bond investors in the U.S. in seeking to force Bank of America Corp. to buy back bad home loans packaged into securities as the battle over who will bear mortgage losses intensifies.