Rates have dropped significantly for long term mortgage loans over the last 2 days.  This was fueled by the announcement by the Treasury Department that they will buy $600 billion in mortgage backed securities.  This news means that buyers of mortgage bonds have more security in their investment.  That drives up the price of bonds, and drives down the mortgage rates.

At the same time, the durable goods report came out today much worse than expected which feeds into the recessionary environment and causing investors to buy bonds to protect capital.  Also, personal incomes rose in October by .3% vs. the expected .1% which is an indication that even though some workers are being laid off, the remaining are working overtime.  This could be an indication that the recession will not be as long as expected, although one indicator for one month is hardly a barometer for any long term prediction.

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