The Federal Reserve Bank of New York has started its plan to drive down US mortgage rates by buying securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae, the government-run financiers.

Mortgage bond yields fell sharply on Monday’s move, extending the dramatic decline since the $500bn plan was unveiled on November 25. Yields on 30-year agency mortgage securities were 190 basis points over Treasuries compared with 208 basis points on Friday.