Quantitative easing and housing inflation post-COVID

Brookings

Aaron Klein

Research

31 Pages

The Fed’s ownership of $2.7 trillion of agency MBS in 2022 was 32% of the entire $8.5 trillion MBS market. Brookings shows that whilst Fed MBS purchases between 2020 and 2022 successfully lowered mortgage rates, they simultaneously drove home prices higher by stimulating demand. The Fed’s MBS purchases were equal to nearly 90% of the growth in MBS during the 2020-2022 QE period.

Key Takeaways

Fed Buying Dominated: The Fed purchased $1.33 trillion of agency MBS, nearly 90% of MBS growth from 2020 to 2022.
Housing Kept Inflation High: Shelter is 36% of CPI and stayed near 4% annual inflation in mid 2025.
MBS Ownership Peaked: The Fed owned $2.7 trillion of agency MBS in 2022, equal to 32% of the market.
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