With values dropping I bet most people who bought at a teaser rate within the last 3 years are upside down, unless they had at least 5% down or took all their equity from a previous home. So even if rates go back to 2% or even 1%, it won’t make an iota of difference to someone who can’t refi cover the original loan, right? Unless the bank eats the equity loss, banks aren’t in business for charity, and now the buyer has to qualify under new standards.

Point being lower rates will do little to no good, and in the bigger picture will only cause more problems: i.e. devalued dollar.

Lowering rates is throwing gasoline on the mortgage fire. It’s just going to have to burn out. Unfortunately for most, the fire is still spreading.