Operation Twist may make mortgage rates higher. The Fed and the White House want more people to take advantage of low mortgage rates. But, the spread between interest rates and mortgage rates keeps going up, not down. It is more than 2%.
Investors are not excited about buying mortgage backed securities. This keeps putting pressure on rates pushing that spread up. With the Fed selling short and buying long, that may make 30 year mortgages even more expensive.
Plus, the pressure the government has put in banks to loan to more credit worthy borrowers, added lending restraints, and proposing the elimination of interest deductions on mortgages, it’s all going wrong for the White House.
Without a recovery in housing, a recovery in jobs is unlikely.
The clock is ticking toward the 2012 election and the president seems to be doing everything he can do to make sure it gets worse rather than better by 2012.
Keep up the good work, Mr. President.
