The biggest chunk of quantitative easing from the mortgage purchases, which replaced other emergency lending programs the Fed allowed to run off. As a result of those moves, the Fed is credited with helping lower mortgage rates and corporate credit yields. Those actions, in effect, forced investors into riskier credit markets.
Another Fed program also comes to an end today. It's the consumer credit side of the TALF program, which helped secure loans for autos, students and credit cards. The commercial real estate part of TALF ends in June.
The Fed's calculation is that it will help keep mortgage rates down by keeping the massive stock of mortgages in its portfolio off the market. In other words, a reduced total stock of mortgages will help keep a healthy bid in the market by the private sector.
Still, the private sector needs to step up now to replace some $100 billion or so of mortgages the Fed bought each month. It is expected to do so, but at a cost. That cost could be anywhere from 30 to 50 basis points higher, though some argue there may be no rise in rates.
More interesting is the question of whether the Fed is now guaranteeing mortgages rates at a certain level. The Federal Open Market Committee left open the possibility of coming back into the market in its statement earlier this month when it said, "The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability."
What is unknown is whether the Fed has a level of the mortgage rate in mind that it believes would derail economic recovery—and bring it back into the mortgage market again.