The automatic stabilizer is unemployment insurance, food stamps, additional coverage of Medicaid.
From Franklin Raines
And so we have to be careful with looking at additional stimulus that we don't provoke an increase in the bond rate and then offset a lot of the stimulus we've already got.
That is - the reason for that is that home prices are only going to go up. Now, they've never gone down nationwide in our - since we've been keeping track of this.
They flooded liquidity in the marketplace but the mortgage rate is based much more on expectations of inflation. So if the average investor believes that there is inflation coming, they'll move that rate up.
Well, I think as long as people are talking about stimulus, I think the Fed will be thinking about cutting rates because monetary policy is the better way to go because you can turn it on and turn it off.
Well, you know, we've got a lot of stimulus in the economy already from the tax cut, from the lowered interest rates, and also from the refinancing of mortgages.
I think if you go beyond a year - if this continues into the system in the out years, I think there is a risk and that - that we could have a negative reaction in the bond market and that will offset the good that was attempted to be done.
And so the danger for the housing industry is if we see interest rates rise.
Right now we think that rates will stay low, that you'll be able to get a mortgage below seven percent and that's kicked off a refinance boom that's going to put more money in the pockets of consumers.
So from the housing standpoint, steady as you go, I think, would be the best medicine.
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