Eric S. Rosengren, president and chief executive of the Boston Fed, said in an interview at The Courant that he expects [mortgage] rates to rise when the [Fed MBS purchase] program ends — or before, as the end approaches.
Actually, I’ve been surprised that we haven’t seen more of a backing up already,” Rosengren said. “You maybe would have thought you would have seen rates move up more quickly than they have, but nonetheless that is a concern.”
The mortgage rate increase of one-half to three-fourths of a percentage point from the end of the Fed program would happen regardless of any Fed action in interest rates, Rosengren said.
Rosengren said the Fed could choose to extend the mortgage buying program if the economy deteriorated dramatically.
“That’s not in our forecast,” Rosengren said. “That’s not what we’re expecting.”