NEW YORK (Reuters) – A key element of the stimulus package aimed at jump-starting the ailing U.S. housing market may have the unintended consequence of raising mortgage rates, said analysts studying the plan."
Very true. That is however down the road.
Immediately, the mortgage rates will go lower and the banks will be provided a wider profit margin. That will most benefit people who are financially secure (by allowing them to buy more for their money)… and keep alive the people teethering on the verge of bankruptcy. The hopeless ones are hopeless anyway.
However, we may be setting up the economy, and the housing market for a harder fall in a future.
The dollar will be weaker and foreign investment will flee to Europe for higher interest rates. But then again US assets will be cheap thereby attracting more foreign investments. It's a juggling act. Let's hope that the gov't doesn't overplay its cards. Otherwise we might have 1980s level mortgage rates.
