Wednesday, November 26, 2008

Spread Continues to Widen Between Fixed Rate Mortgages and Treasuries

The WSJ reports that government moves to ease credit in the mortgage market has succeeded in bringing down mortgage rates in the past few weeks. However, the spread between the rate on 30-year fixed rate conventional mortgages and 10-year treasures continues to widen. The spread reached 266 basis points in the previous week. The widening gap indicates the increasing inability of traditional monetary policy to affect credit market conditions in mortgage markets.

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