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July 30, 2012

This Chart Proves the Relationship Between Mortgage Rates and Home Prices is FALSE!

It's a simple argument; the Federal Reserve is lowering interest rates in an effort to stabilize prices. In a clear move intended to stabilize the housing market and lower mortgage rates, the Federal Reserve purchased mortgage backed securities. The below chart shows mortgage rates (blue line, left axis) and y/y home sale price changes (green line, right axis) The bottom chart includes a four quarter moving average of house prices (in black).  Please explain to me how the below chart distinguishes that relationship?

Enough said.

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