How are mortgage rates affected when the Federal Reserve enacts contractionary and expansionary monetary?

Question

policy? Why?

Answer 1

When the fed has an expansionary policy it increases the supply of money (loanable funds) faster than GDP growth which all else being equal will lower rates.
When the fed has an contractionary policy it supplies of money (loanable funds)slower than GDP growth which all else being equal will increases rates.
In the real world all else is not equal, the demand for money can and usually does shift , so interest rate do not always behave as expected, so now the fed just raises or lowers the short term overnight rate by intervening in the market, buying and selling bonds.
The fed is trying to smooth the business cycle.

Answer 2

Here's the short-hand answer

A) Contractionary policy --> Higher interest rates to banks --> Higher rates for new and adjustable mortages

B) Expansionary policy --> Lower interest rates to banks--> Lower rates for new and adjustable mortages

Answer 3

The fractional reserve economic coverage is the present economic situation. while one considers the Federal Reserve as an tool of wealth distilation then the recession does not look like a mistake in any respect.