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Mortgage Rates: The Best Is Behind Us

Written by Gary North on July 15, 2013

Here is the historic reality of 30-year mortgage rates in America.

FRED-mortgages-1970

Here is what has happened over the last year.

FRED-mortgages-2012

The Federal Reserve System started pumping in new money this year: QE3. It did so, it said last December, in order to keep mortgage rates low. It said this:

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee will continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will purchase longer-term Treasury securities after its program to extend the average maturity of its holdings of Treasury securities is completed at the end of the year, initially at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and, in January, will resume rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.

Hard to believe? You can see the press release here.

Do you think the economists at the Federal Reserve know what they are doing? I don’t. Call me skeptical of Keynesian economists.

These are the people in charge of monetary policy. These are the people Wall Street investors trust. These are the people trusted by the textbook writers. These are the people who all economists except Austrian school economists trust more than they trust free market money: the gold coin standard.

We’re in bad hands with All-State.

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