...because Treasury wants to cut the rates on new mortgages to 4.5% as I pointed out this morning. The questions about the plan are thus: Cui bono? Who benefits from the leak of this plan? Not the mortgage industry. Home sales this week have dried up as buyers are now backing out, waiting for this new lower rate. Not Treasury, because now they have to do this or else. I can't see a reason to do this, especially when the plan itself is still in the larval stage.
The other question is "Will it work?" Remember how we got into this mess? Historically low interest rates and easy credit after the 2002 recession when Alan Greenspan lowered the Fed rate to 1% and mortgage rates dropped. Everyone and their mom bought a home...and now Treasury wants to drive those rates even lower. Stop and think about that for a second. Greenspan dropped rates so low that everyone bought homes on easy credit and cheap financing and it created a massive multi trillion dollar housing bubble. When it popped, BOOM went the entire global economy.
So, somebody explain to me how the best plan for stabilizing the housing market is to destabilize the housing market into an even larger housing bubble than before, will ya? This is like fighting fire with lava.
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