That's the number of mortgage bonds the Fed has purchased since March 2020. The Fed plans to reduce its bond holdings in the coming months which could drive up mortgage rates.
WHAT'S THE INSIDE SCOOP WITH THE FED RATE HIKES?
The Federal Reserve hiked short-term interest rates for the first time in four years last week and signaled that more rate hikes are on the way. More importantly for mortgage rates, the Fed confirmed it will be exiting its massive bond-buying program. Since the pandemic hit the economy in March 2020, the Fed has purchased an eye-popping $2.9 TRILLION of mortgage bonds, making it the biggest buyer of bonds in the market. This caused interest rates to go down to record levels. However, mortgage rates spiked higher in recent weeks after the Fed announced it would be scaling back its massive bond-buying program.
HOW DOES THIS IMPACT YOU?
The average interest rate on fixed-rate mortgages went up by approx. 1% so far this year according to Freddie Mac's weekly survey of mortgage rates. It seems likely that mortgage rates will continue higher in the weeks and months ahead as the Fed winds down its bond-buying programs and reduces its massive portfolio of bond holdings.
WHAT SHOULD YOU DO ABOUT IT?
This would be a good time to lock in your interest rate if you haven't done so already.