Federally Subsidized Interest Rates

[erpowers]

I know that the provision to federally subsidize an interest rate of 4% on fixed-rate mortages is not in the Senate stimulus bill, but I still wanted to discuss the idea. I really do not like the idea. I do not think the government should artifically keep interest rates low. At least I do not think a rate should be federally subsidized.

I do have a question about federally subsidized interest rates. Other than interest rates going up if rates are not kept low what would be the consequence of allowing interest rates to go up. I guess I know people would have less buying power and might buy less, but is there anything else?

So, what do other DUers think? Should the government subsidize interest rates? As I said before I do not like the idea.

This is a link to a story in which subsidizing interest rates is mentioned.

http://realestate.msn.com/article.aspx?cp-documentid=17198334>1=35000