Fed makes effort to boost housing

WASHINGTON — The Federal Reserve’s ambitious new effort to aid the recovery by aiding the housing market is likely to have a modest effect on sales, given the pervasive weakness in the economy and real estate market, specialists predicted Friday. “The incremental benefit of slightly lower mortgage rates will be small,’’ Paul Diggle, a property economist at Capital Economics, wrote in a note to clients.

“After all, most borrowers in a position to refinance have probably already done so. And it’s not obvious why a would-be buyer who wasn’t tempted by a 3.7 percent mortgage rate would be by, let’s say, a 3.25 percent rate,’’ he wrote.

Other analysts agreed, saying that the Fed program would help the housing recovery at the margins, but that even lower mortgage rates would not be enough in and of themselves to spur a strong turnaround.


On Thursday, the Federal Reserve announced a third, major round of asset purchases intended to speed up the stalling recovery, bring down interest rates and increase employment.

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‘‘While the economy appears to be at a path of moderate recovery, it isn’t growing fast enough to make significant progress reducing the unemployment rate,’’ Ben S. Bernanke, the Fed chairman, said at a news conference Thursday.

The Fed is now aiming at the unemployment problem by purchasing mortgage-backed securities at a pace of about $40 billion a month for an indefinite period of time. The effort will increase prices and demand for those mortgage-backed securities and push down mortgage rates, already near their historical lows. That might encourage more families to refinance their mortgages and others to purchase a home, with ripple effects through the real-estate industry and the rest of the economy.