Quantitive Easing's Positive Legacy
Quantitative Easing’s Positive Legacy for US Mortgage Holders
Quantitative Easing’s Positive Legacy for US Mortgage Holders As the Federal Reserve raises rates in an effort to stifle inflation, what are the implications for US mortgage holders? The Fed purchased, in gross, $1.24 trillion of MBS in QE1. In the QE2/Operation Twist period, it reinvested $242 billion of principal payments into MBS. The Fed purchased an additional $800 billion of MBS in QE3 and an unprecedented $3 trillion in QE4. We believe QE has helped alleviate the mortgage burden of the average US household, which has become a much smaller portion of disposable income than it was before the GFC. 1) It increased housing affordability and suppressed defaults. 2) It ensured a lower mortgage burden for a majority of US homeowners for the foreseeable future.