Operation Twist Buys $5.5 Billion More in MBS

by Chicago Agent

The Federal Reserve Bank of New York, as a part of what is commonly being referred to as “Operation Twist,” purchased $5.5 billion in mortgage-backed securities for the week of November 9.

The new MBS purchases have been guaranteed by the government, and according to recent reports from HousingWire.com, the Fed has been reinvesting capital from previous MBS purchases since October 3. From October 3 to the present, the Fed has bought $25.5 billion in Fannie Mae, Freddie Mac and Ginnie Mae securities.

In the most recent purchases, the Fed purchased roughly $1 billion less than the week before. The November 9 purchases consisted of $3 billion worth of Fannie Mae guaranteed MBS, $2.2 billion worth of Freddie Mac MBS and $300 million worth of Ginnie Mae MBS.

Operation Twist was created with the hopes of keeping borrowing costs down for consumers; so far it has been serving this purpose. The average interest rate for a 30-year fixed-rate mortgage decreased by 4 percent the same week that the Fed made its most recent MBS investment. Aside from the MBS purchases, the Fed also began buying $400 billion in Treasury bonds as a part of Operation Twist.


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