NY, Boston Feds to discuss mortgage market woes

WASHINGTON (Reuters) - Two regional Federal Reserve banks will host a conference in New York on Monday to discuss why some of the benefits of the central bank's asset purchases may not be making their way down to U.S. consumers.

New York Fed President William Dudley has expressed concern that some mortgage lenders might not be passing the lower rates they are seeing in the mortgage-backed securities market onto their customers.

"The spread between primary mortgage rates and agency MBS yields has widened and this has limited the drop in primary mortgage rates," Dudley said in an October speech.

The conference will be co-sponsored by the Boston and New York Fed banks, while Boston Fed President Eric Rosengren will give the keynote speech.

A list of participants was not yet available but the New York Fed said in a release it would include mortgage originators, government-sponsored enterprises, policymakers, regulators and academics.

Another key concern for the Fed is that credit availability may have become overly stringent.

"While some tightening of the terms of mortgage credit was certainly an appropriate response to the earlier excesses, the pendulum appears to have swung too far, restraining the pace of recovery in the housing sector," said Fed Chairman Ben Bernanke in a speech last week.

The Fed announced in September that it was embarking on a third round of quantitative easing or QE3. This time, the central bank opted for an open-ended program of asset purchases, starting with $40 billion of mortgage-backed securities per month.

For more details on Monday's conference see: http://www.newyorkfed.org/research/conference/2012/Mortgage_rates.html

(Reporting By Pedro Nicolaci da Costa; editing by Andrew Hay)