Incase the Fed was forced to extend the MBS purchase program, wouldn it imply some key element of the housing market equation was too weak to be removed from life support?
Unless you believe that mortgage rates are going to skyrocket after the Fed exits the TBA MBS market, it seems similar we face bigger problems. I know abridged mortgage rates were the biggest reason for business in 2009, but that won’t be the case in 2010. Those borrowers, the ones who qualify, already took advantage of low rates. Originators will need a recent source of business in 2010. Purchases are the immediate loan class that comes to mind. (redundent at this point) Incase the purchase market fails, it wont be the fault of high mortgage rates. It will be the result of a lack of credit worthy borrowers. Consumer demand side support will be crucial incase housing is to extend any progress that has been made in the final 6 months as well as unfortunately, there are several factors moderating growth in consumer demand. Damaged consumer credit profiles need time for repair. This means a stable job will be required to ensure consistent payments are made as well as credit is properly me
