The most recent Federal Open Market Meeting minutes from the Federal Reserve show some members still supportive of mortgage-backed securities purchases, although a general sense of caution emerged in the room.  

Despite some skepticism, participants remained gung-ho on housing, noting that demand is picking up after a period of debt deleveraging.

Several participants even linked an uptick in household spending on cars and houses to the Fed's looser monetary policies, which have reduced the cost of financing.

The housing market overall is seen as improving due to rising home prices, which in turn strengthen household balance sheets.

"Such a dynamic was seen as potentially leading to a virtuous cycle that could help support household spending and financial market conditions over time," the Fed minutes reflect.

Not to mention, the survey shows homebuilders remaining somewhat optimistic. But there are doubters or participants who refrained from jumping on the housing recovery. One participant said consumer preferences and demographics are shifting, making the outlook for housing "quite uncertain and potentially subject to rapid changes."

The Fed's monthly MBS purchases remain a key part of the housing recovery envisioned by Bernanke in past speeches. The committee agreed to continue buying MBS at a pace of $40 billion per month along with longer-term Treasury securities at a pace of $45 billion per month.

The minutes also show a Fed where certain members still view the risks and costs of additional mortgage-backed securities purchases as manageable, while others say the market needs to be watched closely for any signs that suggest quantitative easing should be curtailed.

FOMC members further debated the possible adverse effects from MBS sales during the normalization of the Federal Reserve’s balance sheet.

"A few participants noted that they already viewed the costs as likely outweighing the benefits and so (they) would like to bring the program to a close relatively soon," the FOMC minutes state.

bswanson@housingwire.com