In contrast to Olivier Blanchard, who does. I'm with Dudley on this:
The very smart and hard-working Cardiff Garcia writes:
Dudley on mortgage market impairment: NY Fed president Bill Dudley weighs in on something written about here and many, many other places — the impairment of mortgage markets and how it affects monetary policy transmission:
One reason that monetary policy may have been less powerful than normal is that one of the primary channels through which monetary policy influences the real economy—housing finance—has been partially impaired. This has both quantity and price dimensions. Credit availability to households with lower-rated credit scores remains limited and households with homes that have fallen sharply in value have lost most or all of their home equity and this makes it very difficult for them to refinance these mortgages.
Federal Reserve MBS purchases have succeeded in driving down mortgage rates to historically low levels. But these purchases would have had still more effect on the economy if pass-through rates from the secondary market to the primary market had been higher. …
The incomplete pass-through from agency MBS yields into primary mortgage rates is due to several factors—including a concentration of mortgage origination volumes at a few key financial institutions and mortgage rep and warranty requirements that discourage lending for home purchases and make financial institutions reluctant to refinance mortgages that have been originated elsewhere. On a related note, higher guarantee fees charges by Fannie Mae and Freddie Mac have increased the fixed cost of originating loans and this has also increased the spread between primary and secondary mortgage rates. Factors limiting pass-through warrant ongoing attention from policymakers.
And Cardiff comments:
We’ll have more on this later, but to the above list we would add the heightened scrutiny in home appraisals, worries about the revival of securitisation markets as Fannie and Freddie (very) gradually pull away, and the awaited detail from regulators on the definitions of qualified mortgages and qualified residential mortgages. Thus far the surging mortgage origination business at banks has been concentrated in refinancing rather than purchases. The refi boom is great but can only last so long, as Dudley writes, and from a macroeconomic perspective has less of an impact than a housing purchase and construction rebound...