Maybe the Fed should buy more mortgage bonds?
Mortgage interest rates are rising. If they continue to do so, then the Federal Reserve will probably become pretty frustrated. Today it reaffirmed its latest round of quantitative easing, explicitly designed to keep down longer-term interest rates, like those for mortgages. So what's going wrong? Apparently mortgage bonds aren't selling so well right now. Less demand is leading to higher yields. Perhaps the Fed should consider buying some of these securities too. ... If the Fed broadened its purchases to include mortgage securities, then this additional demand could help keep mortgage interest rates low. That, consequently, would help to prevent high rates from frightening away perspective home buyers.