Despite the Federal Reserve’s near zero interest rate policy, most in the housing industry expected interest rates and therefore mortgage rates would be going up in 2014.

But just last week mortgage rates hit a six-month low of 4.2%.

Job growth continues to disappoint, affordability remains an issue, and sales of almost all single-family home types are weak. Mortgage applications are slow. Wage stagnation remains a challenge for both housing and for the economy in general.

Over at MarketWatch, Diana Furchtgott-Roth makes the case that the artificial pressure on keeping rates down isn’t doing anyone any good.

Five years after the beginning of the economic recovery, after rock-bottom interest rates and trillions of dollars of quantitative easing by the Federal Reserve, the economy is growing about 2%.

No country has attained prosperity by printing money and weakening its currency, and the United States appears to be no different. Monetary stimulus might be useful in the initial stages of a recession and recovery, but zero percent interest rates for years on end are a different matter altogether. Under Fed Chairman Ben Bernanke and his successor, Janet Yellen, the dollar has fallen about 15% against the euro.

Pimco’s Bill Gross, manager of the $230 billion Pimco Total Return Fund, is among a growing group of investors and economists to suggest that the drop in bond yields since the beginning of the year reflects expectations of a lower Fed lending rate.

No one has explained the danger of endlessly low rates better than Columbia University professor Charles Calomiris, coauthor of “Fragile by Design: The Political Origins of Banking Crises ,” an insightful new history of the financial crisis recently published by Princeton University Press.

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