Big Rate Drop

The Fed's "Mortgage Shopping Spree"

Drowned out in all the health care reform discussion is a quiet -- but big -- drop in mortgage rates.

As of this morning, rates on 30-year mortgages are being quoted at 5%.

That's a big improvement over just six weeks ago, when rates were in the mid-5's -- and thought to be heading higher -- based on excess liquidity-driven inflation fears.

Now, the mortgage market and long-term rates appear to be driven by two things:

One. Relatively weak demand, due to the soggy economy; and

Two. The Fed's concerted program to buy up mortgages and keep the market liquid (it has a cool, $1.25 trillion (!!) war chest to do exactly that).

Not necessarily in that order . . .