Each week, mortgage rates establish a new all-time low. Is this a good thing? Many lenders and economists think so. After all, fewer dollar tied up in housing expenses means more dollars to spend and invest elsewhere.

The Federal Reserve's policy of purchasing long-term bonds means mortgage lending rates will likely stay low through 2013. If the Fed injects more money into the economy by purchasing these long-term bonds with new money, rates could go even lower.

The push for more money and lower interest rates is seductive, but there is another side to the coin: private capital. If investors and savers are getting paid little for tying up their money, they won't tie up their money. That means the market becomes even more dependent on government sources of financing. This, in turn, means a less diverse market.

The problem with a less diverse market is that we see a lot more recycling, meaning the same people refinancing repeatedly. Granted, the latest HARP has brought new refinances into the market, but we'd like to see the market promote more borrowing driven by new buyers. We think more private capital would do that. But private capital, unlike public capital, demands a positive rate of return. Today's low rates don't provide that.

Courtesy of Jessica Regan.

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