Something strange is happening in the market for mortgage-backed securities: the largest buyer by far is about to leave the market and no one seems to be blinking an eye.

When the Federal Reserve announced in September that it would begin slowing its MBS purchases and cease them by the end of the first quarter, mortgage bankers winced. They feared that without the Fed to prop up the market, the prices of such securities would sink, causing their yields, relative to benchmarks like Treasury bonds, to soar. Such an increase would in turn cause mortgage rates to jump, sapping demand for home loans in an already-weak housing market.

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