Applications for U.S. home mortgages jumped in the latest week bolstered by increases in refinancing and new home purchases as long-term rates decreased, according to data from the Mortgage Bond Association.
Greenspan, the former Fed chief's comments suggest a more sanguine view of the U.S. housing market than that offered by current Fed chairman Ben Bernanke, who said last week that the housing market was currently undergoing a "substantial correction."
Some bond market participants in London said on Monday that Greenspan's remarks helped drive bond prices down further and yields higher, and obscured concerns surrounding the news that North Korea said it safely and successfully conducted an underground nuclear test over the weekend.
U.S. bond markets were closed on Monday in observance of the Columbus Day holiday.
Greenspan said the fall of communism, not sharp interest rate cuts by the Fed, was behind the housing boom in the early part of the decade. Cheap labor flooding into the West after the fall of the Berlin Wall had a disinflationary effect, causing bond yields to fall and house values to rise, he said.
On another topic, the former Fed chair said that China is unlikely to quickly adopt a flexible exchange rate regime as it transitions to a market economy from a centrally planned one.
Many economists and policy-makers believe China keeps the value of its yuan currency low to make Chinese exports cheaper on world markets, fueling export-led growth but contributing to China 's large trade surplus with the United States .
"The greatest fear of the central government of China is insurrection and so they refuse to revalue their currency in the hopes of continued surging job growth," Greenspan said.
"Schumer never thought he would get the congressional support he did," Greenspan said of the New York Democrat. "He was only trying to pressure China to revalue (the yuan), not to actually slap a 27.5 percent tariff on Chinese goods."
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