The Bridgewaters, Massachusetts

As promised, the New York Fed began purchasing mortgage and student debt on Monday, January 5th, in an effort to thaw frozen credit markets and restore confidence in the economy.

"This program, first announced on November 25, 2008, is intended to support the mortgage and housing markets and foster improved conditions in financial markets more generally," the New York Fed posted in a press release on its website. "The $500 billion Mortgage Backed Securities (MBS) purchase program is part of a broader monetary policy initiative geared at stimulating an economy where the interest rates are already near zero." The New York Fed also promises to publish updates every Thursday on how their MBS purchase program is progressing.

The Fed will purchase up to just a few billion dollars worth of MBSs a day to start. Their hope is that the MBS investors will jump on the "buying bandwagon" to help push mortgage rates down. The Feds will then be in a better position to purchase MBSs when "market conditions warrant" which in turn will help keep mortgage interest rates low. We're hoping that mortgage rates will eventually stabilize in the low 4.0% - 4.5% range.