After Fed, who will invest in housing?

The Fed has said it would stop buying mortgage-backed securities in March as it hits its limit of $1.25 trillion in purchases of bundled mortgages in a program that has kept lending rates low and provided liquidity to the housing market.

While backing away from the program, the Fed is banking on foreign wealth funds to pick up the slack, buying U.S. securities, The Washington Post reported Tuesday.

But foreign wealth funds took huge losses when the market crashed two years ago.
How much are they willing to invest now?
"I don't think it will be enough to fill the hole," said Ajay Rajadhyaksha, investment strategist at Barclays Capital.

R.P. Eddy of Ergo, a consulting firm, said, "a lot of sovereign wealth funds have a vested interest in seeing the United States stabilize. But some wealth fund coming in to save the day? That is not going to happen."

Paul O'Brien, head of fixed-income strategy at the Abu Dhabi Investment Authority, said the U.S. government was likely to step in with a new program to support the housing market.

Copyright 2010 United Press International.