OK, to further its attempts to 'goose' the economy the Federal Reserve recently announced a third round of 'Quantitative Easing" (hereafter QE3). Going forward they will be purchasing approximately $40 billion of mortgage-backed securities (MBS) per month for the foreseeable future. Apparently this is in an effort to keep mortgage interest rates low, which it is hoped will stimulate the housing sector's recovery (and thereby contribute to improving the general economy.)
OK, but aren't mortgage interest rates already at historic lows? Well, er... yes... Per Bloomberg: "... The average rate on a 30-
year fixed mortgage held at 3.55 percent in the week ended Sept.
13, near a record-low of 3.49 reported July 26 in data dating to
1971, according to McLean, Virginia-based Freddie Mac.." So, is the Fed's move an answer in search of a problem?
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