As the Federal Reserve's $1.25 trillion mortgage bond purchase completed today, there is a likelihood of loan buyouts by Fannie Mae and Freddie Mac, which may save the mortgage-based market by removing an amount of $5 trillion through the purchases.

These buyouts will compensate for billions held in the mortgage investments. With this, the investors will be able to do away with the voids in the mortgage market.

The central bank will now be able to keep the mortgage rates low, which are associated with the yields on Treasuries and mortgage-financed securities.

According to Matthew Jozoff, Managing Director and Head of Mortgage Strategy at JPMorgan in New York, the loan buyouts of $200 billion were first announced by Fannie Mae and Freddie Mac, in February. He suggested that this buyout will provide $140 billion of cash to the private investors.

Chief Portfolio Manager from U. S. fixed income team, at Lazard Asset Management, Joe Ramos, said that the expected buyouts will help in saving the economic growth, allowing a smooth exit of the Fed.

"While reinvestments from paydowns will not be big enough to fully offset the buying by the Fed, it should help keep prices firm", he said.