Double-Dippers Are All Wet Ignoring Yield Curve: Caroline Baum

There have been whispers, or maybe it’s just wishful thinking, that the Federal Reserve might buy more long-term bonds, lowering interest rates and making housing more affordable. (You know that modified mortgage that didn’t work out so well? Have we got a deal for you!)

At 4.6 percent, 30-year mortgage rates are already at historic lows, yet housing demand cratered as soon as the government’s homebuyer tax credit expired in April. If you think lowering long-term rates and reducing the spread between short and long rates will stimulate the economy, think again. The steep yield curve is the most powerful thing the economy has going for it right now.