Mortgage rates jumped to 6.25% could it be because the fed unloaded $20 billion in mortgage backed securities

9/2/2022

RawNews1st – Mortgage rates jumped to 6.25% could it be because the fed unloaded $20 billion in mortgage backed securities.

The Federal Reserve’s interest rate hikes to tamp down inflation have pushed mortgage rates up this year for the biggest increase in 40 years.

That’s made homeownership unaffordable for many Americans. But lending rates are also going up and then down sharply from week to week.

For borrowers and consumers, the fed rate hike means that many types of financing will cost more due to higher interest rates.

Adjustable-rate loans, such as ARMs (that are no longer in the fixed-rate period) and credit cards with variable rates, often see higher interest rates when the Fed hikes their benchmark rate.

Meanwhile they bought $441 million in new treasuries.

During the July – September 2022 quarter, Treasury expects to borrow $444 billion in privately-held net marketable debt, assuming an end-of-September cash balance of $650 billion.[3] The borrowing estimate is $262 billion higher than announced in May 2022, primarily due to changes to projections of fiscal activity and the estimated impact of Federal Reserve System Open Market Account (SOMA) redemptions ($120 billion).
During the October – December 2022 quarter, Treasury expects to borrow $400 billion in privately-held net marketable debt, assuming an end-of-December cash balance of $700 billion. This includes the impact of an estimated $139 billion in SOMA redemptions.

During the April – June 2022 quarter, Treasury borrowed $7 billion in privately-held net marketable debt and ended the quarter with a cash balance of $782 billion.

In May 2022, Treasury estimated a pay down of $26 billion and assumed an end-of-June cash balance of $800 billion. The $33 billion difference in privately-held net market borrowing resulted primarily from the $30 billion in net SOMA redemptions.