When the Mortgage Stimulus Program Ends: Where to Now
The Federal Reserve will stop the program that helps Americans save for retirement, the government announced Monday.
The move comes as interest rates on mortgages begin to rise and some of the program’s main beneficiaries, including banks, have begun to cut back.
The Fed announced the changes on its website, saying it would “evaluate the future effectiveness of the Federal Reserve’s mortgage stimulus program” to determine “whether it is appropriate to continue the program.”
“The Federal Reserve expects that the program will be discontinued once the unemployment rate declines below the Federal Government’s 3.5% objective,” the statement said.
The Federal Deposit Insurance Corporation also announced Monday it would begin cutting back on its mortgage loan insurance program.
In a separate announcement, the White House said President Donald Trump has instructed the Fed to delay its $4.7 trillion stimulus package until the unemployment level falls to 3.7%.
The Fed’s actions come as the US economy continues to falter amid the continuing economic downturn.
According to the Labor Department, the unemployment average rose to 5.2% in October, down from a high of 7.9% in September.
“Today’s announcement marks the beginning of the end of the federal mortgage program,” Fed Chair Janet Yellen said in a statement.
Trump has said he wants the Fed and Congress to stop the mortgage loan program, which he said was costing the US $3 trillion a month.
“It’s the worst, most wasteful program in the history of our country,” Trump said in September, adding, “You are going to have to have it stopped.”