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Fed wants to bet the house, again

Posted on 24 October 2011

Dan TarulloA 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………………………………………Full Article: Source


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