4.5% - 30 year mortgage?

Is 4.5% interest rate on a 30 year mortgage possible? That's what some experts like the Dean of Columbia Business School, Glenn Hubbard has suggested that the US government should temporarily peg at, to alleviate the foreclosure crisis in the US. I am not sure why this is very difficult especially given the government intervention at multiple levels to prop up the housing and the economy. Some critics have cited such a move would bypass the market economics of supply and demand. But correct me "If everything in capitalism was based on supply and demand then there would have been absolutely no need to bail out failing banks and mortgage companies in the first place". Did I miss something?

Comments

  1. AnonymousMarch 10, 2009 at 10:29 AM

    As per Warren Buffet recently "our economy has fell off a cliff". So the normal equation of supply and demand may not be reasonably applicable to any scenario. Good point! Post it on the President's web-site.

    ReplyDelete

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