Yesterday Fed Chairman Ben Bernanke addressed Congress' Joint Economic Committee, and delivered a surprising message of how quantitative easing is an unuseful tool in today's environment, and that a Fed tapering of liquidity could begin over the next two Federal Open Market Committee meeting sessions.
If his forward looking messaging becomes a reality over the next six to 12 months, this could have a significant impact on the US housing recovery, as it would mark the end of historic 70-year low mortgage rates.
Could the market continue its robust rebound if the average fixed 30-year mortgage was at 6 percent, 7 percent or even 8 percent rates? A decade ago, people were ecstatic with a 7 percent mortgage rate, but times have changed.
If Bernanke does begin some sort of "liquidity tapering" over the coming year, it could re-enact a scene for the U.S. housing market recovery right out of The Godfather III when Michael Corleone (Al Pacino) says, "Just when I think I'm out, they suck me back in!"