In response to a Congressman’s question, Ben Bernanke said that he would look for a severe market reaction after the Fed stopped its purchases of mortgage-backed securities.
In other words: If stopping buying them really causes problems, he’ll probably go back to buying them.
And in other words: He doubts it’s really having a huge impact either way right now.
The bottom line is that nobody has to worry that the government will let mortgage rates go up anytime soon.
As we pointed out yesterday, Fannie and Freddie have a blank check to underwrite mortgages, so even if Bernanke stops (and stops for good) another organ of the government will simply fill that void.
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See Also:
- Watch Ron Paul Just Shred Bernanke
- BofA/Merrill Lynch: Hedge Fund Managers Suddenly Think It’ll Be A Long Time Before Bernanke Raises Rates
- Why You Should Completely Ignore Any Discussion Of Whether The Fed Will Still Buy Mortgage-Backed Securities