Just curious, how does the Fed selling Freddie Mac and Fannie Mae/Ginny Mae mortgage backed securities cause a shift in the markets? What's the likelihood the Fed would actually do something like that?
It's basically trying to kill housing demand via interest rates. Selling MBS is a much more direct effect on mortgage rates than something like the fed funds rate
An increase of MBS offered on the market will cause mortgage rates to rise because there's too many loans for sale and not enough buyers. Buyers will demand higher and higher rates to make it worth their while.
Someone/something has to be buying the MBSs today, wouldn't selling them on the market just increase potential buyers? Sorry that I'm not following.