"Policy Error"

"The great quantitative easing experiment was a mistake. It’s time central banks acknowledge it for the failure it was and retire it from their policy arsenal as soon as they’re able."

From the Washington Post

"Since the global financial crisis of 2008, an integral part of central banks’ play book in the US, the UK and the European Union has been QE — the practice of buying up long-term bonds and mortgage-backed securities. QE is supposed to work by lowering long-term interest rates, which boosts demand and increases lending and risk-taking.

There is little to show in terms of the economic benefits of QE, but there are plenty of costs. Now central banks find their hands tied as they try to curb inflation with interest rate increases and quantitative tightening, which means no more purchases of long-term bonds and mortgage-backed securities. But they’re finding that ending QE can itself be a threat to financial stability."

The recent increases in interest rates have been very beneficial to your old Uncle Kenny.  Turns out the best way to stop using the financial crack cocaine of Quantitative Easing is to never start using the financial crack cocaine of Quantitative Easing....hmmmm.....who-duh-thunk-it??

The Fed Is Not Coming to the Rescue This Time

2021: The lowest 30-year mortgage rates ever:

And it kept falling to a new record low of just 2.65% in January 2021. However, record-low rates were largely dependent on accommodating, Covid-era policies from the Federal Reserve.

Current:  Weekly national mortgage rate trends

On Saturday, December 03, 2022, the current average rate for a 30-year fixed mortgage is 7.32%, increasing 15 basis points over the last seven days.

Mortgage interest rates are no where near topping out because the Fed is no longer buying mortgage backed securities.  

I said it a long time ago - the only entity stupid enough to buy multi-decade duration, fixed rate securities so that the average Lower Slobovian in the United States could afford an over priced shit shack in fly over country is the Federal Reserve. 

Private investment has since stepped in filling the vacuum left by the Federal Reserve and is now in control of the price of credit for mortgages.  Asking prices for houses work inversely to the price of credit as very few Great Americans have sufficient funds to buy a home outright.  We are no where near true price discovery.  Cash is King.