(Corrects second paragraph to show number is $1.25 trillion)
NEW YORK Jan 5 The Federal Reserve is
discussing re-entering the mortgage-backed securities market
later this year if its buying power is needed to hold down
interest rates, Market News said on Tuesday in a story citing
The $5 trillion agency mortgage-backed securities market
may weaken when last year's biggest buyer, the Federal Reserve,
ends its $1.25 trillion agency MBS purchasing program at the
end of the first quarter of 2010.
Fed officials, however, "are prepared to contemplate
changes if need be, depending on conditions in the economy,
housing finance and in financial markets more broadly," Market
News said in a story written by Steven Beckner.
"Among the options that has been discussed, say people in a
position to know, is doing additional MBS purchases."
The Fed's program has helped keep 30-year mortgage rates
near record lows, attracting buyers to the housing market as it
struggles to exit its worst slump in decades.
When the Fed stops buying at the end of the first quarter,
rate in that market are widely expected to rise, pulling
mortgage rates higher as well.