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Fed Wants to Bet the House, Again . [View All]

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Dover Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Oct-22-11 10:03 AM
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Fed Wants to Bet the House, Again .
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A 4% mortgage rate hasn't revived housing. Perhaps it needs to fall to 3.5%. Or maybe 3% will do the trick.

In recent days, Federal Reserve officials have raised the possibility that they may need to again buy mortgage bonds, as they did in 2009. In theory, that should cause mortgage rates to fall further, bringing more buyers into the market and spurring additional refinancing that frees up consumer-spending power.

But it might not work as well in practice. High unemployment and overstretched consumer balance sheets have kept housing in the doldrums even with record low rates. And for many existing homeowners, fees and lending criteria, not interest rates, are the main refinancing issue. Even Fed Governor Dan Tarullo acknowledged that hurdle in a speech this week on the Fed buying mortgage bonds.

Plus, the Fed might find it tougher this time around to move mortgage rates significantly lower...cont'd

http://online.wsj.com/article/SB10001424052970204618704576645364274307434.html?mod=markets_newsreel











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