Since Fed Chairman Bernanke has announced QE3, the spread between mortgage backed securities (MBS), and benchmark 10yr US Treasuries has all but been eliminated; which has pushed conforming mortgage rates to even lower record lows.
We now have the 30yr fixed at 3.40%, and 15yr fixed at 2.73%. Keep in mind, that QE3's $40 billion in purchases of MBS per month has just gotten underway, and there is no limit to the program in time or quantity. QE3 will continue until 'the economy improves'.
- How low will mortgage rates go before they 'bottom'?
- What effect will this have on housing prices short term, and long term?
- When will Bernanke run out of 'gas' to keep manipulating the yield curve on US Treasuries and pump up mortgage backed securities, so as to keep interest rates low and asset/housing prices high?
(satirical graphics courtesy of WilliamBanzia7)