Mortgage-Bond Carnage Shows What Future Holds Without Fed Help

The video explains how borrowing costs for home purchases are rising faster than treasury yields due to the Federal Reserve's cessation of mortgage debt purchases and its plan to reduce its holdings. This has led to increased spreads on mortgage debt compared to treasuries, marking the largest rise since November 2016. The discussion highlights concerns about higher future borrowing costs for homebuyers.

What is one reason for the increasing cost of borrowing money to buy a home?

• The Federal Reserve has stopped purchasing mortgage debt.

• Treasury yields are decreasing.

• The Federal Reserve is increasing its purchase of mortgage debt.

• Mortgage debt is becoming less popular.

What does the orange line represent in the context of mortgage-backed securities?

• The Federal Reserve's holdings of mortgage-backed securities.

• The total amount of mortgage debt issued.

• The interest rates on new mortgages.

• The average home price in the market.

When was the last time the spreads on mortgage debt versus treasuries increased as significantly as they have recently?

• July 2015

• November 2016

• January 2020

• March 2018

What is a potential consequence of the increased spreads on mortgage debt?

• Lower borrowing costs for homebuyers.

• Higher borrowing costs for homebuyers.

• Increased demand for treasury bonds.

• Decreased interest rates on savings accounts.

How might the rise in treasury yields affect borrowing costs for homebuyers?

• It will have no effect on borrowing costs.

• It will increase borrowing costs more than expected.

• It will decrease borrowing costs.

• It will stabilize borrowing costs.