Fed’s Quantitative Tightening Throws a Wrench Into Mortgage-Bond Market

The Federal Reserve’s plan for its mortgage portfolio is starting to emerge. But for already-skittish investors in mortgage-backed securities, what it will mean for the housing-finance market is still murky.

Even before the minutes of the Fed’s most recent meeting revealed a discussion on allowing its mortgage-bond portfolio to shrink, mortgage rates were beginning to flirt with 5%. Freddie Mac’s latest weekly average of 30-year fixed mortgage rates, published on Thursday, stands at 4.72%, up another 0.05 percentage point on the prior week. Other surveys have had that rate a bit closer to, and even above, the 5% mark.

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