MNI POLICY: Fed's Bostic Says Mortgage Stresses Have Eased

--Bostic Sees No Shift In Rates For Some Time

By Evan Ryser

     WASHINGTON (MNI) - Atlanta Fed President Raphael Bostic on Wednesday said

mortgage-market strains are easing as policy makers allow loan forbearance and

push liquidity into the banking system. 

     Federal Housing Finance Agency rule changes have checked dangers in the

market for jumbo mortgages and signs lenders were pulling back on loans in

places like California, as well as "risk that it would spread into the

single-family purchase market," Bostic said.

     The Fed continues to buy a "significant number" of securities providing

liquidity in the market, Bostic said, but "if there are signs of stresses

starting to emerge" then he would expect Fannie Mae and Freddie Mac to act

again. He didn't elaborate on what kind of action should be taken in that case. 

     The Fed has cut interest rates to about zero and put USD6.7 trillion of

assets on its balance sheet to fend off what's likely the deepest economic slump

since the Great Depression due to the coronavirus.

     --STEADY RATE

     The Atlanta Fed leader said he "doesn't see our policy rate shifting in a

significant way unless we see signs that the economy is truly back on its feet."

Any move could be up to 12 months out and the Fed should refrain from acting

"prematurely and cut off some of the momentum."

     Bostic also encouraged landlords and other borrowers to speak with lenders

to avoid overly burdensome debt burdens through the coronavirus pandemic.

--MNI Washington Bureau; +1 202 371 2121; email: evan.ryser@marketnews.com

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