Bob, your scenario is both plausible and well-supported.
The Fed and this administration well understand that any significant rise in mortgage interest rates would quickly choke off any emerging recovery in the economy. Accordingly they will do whatever it takes to keep the easy money flowing to home buyers. They will stimulate or compel mortgages to be abundant and cheap, even if it means a two-tier rate structure in which bond market rates trend higher but home mortgages remain a bargain. Subsidizing buyers plays well politically and shows up elsewhere in policy.
For example, it is already clear that the big 3 automakers will be induced (bribed) to make small cars domestically via government subsidies to buyers, by some direct or indirect (hidden) means. Raises overall mileage average, “helps” beleagured car buyers, props up the overpaid UAW workers, and sells politically. Just the kind of politically driven market tinkering we’ll see more and more of, with destructive overall long-term effects.
