The lackluster recovery and persistently high unemployment motivated the Federal Reserve to announce more action to attempt to boost economic growth. Last week, the Fed stated that it would buy $40 billion worth of mortgage-backed securities every month and would keep buying them until the job market improves. Operation Twist also has been extended, along with an announcement that the Fed will likely keep rates low well into 2015. Mortgage rates responded by moving downward toward historic lows, and may hit historically low territory again this week.
While the Fed's actions are designed to attempt to help keep mortgage rates low, and in turn, help the housing industry as a whole, we are in uncharted territory in terms of the Fed's overall approach. As has been pointed out repeatedly, monetary policy alone cannot fix the country's, or the world's, economic woes. Our legislative and executive branches of government must engage and participate in helping drive economic growth, rather than relying almost exclusively on central bank policy.
(Thanks to Joe Massey for the content!)