Furthermore, many of the worst subprime loans were made after the federal funds rate had normalized, and reflected a wide array of deficiencies in the financial markets. The contrasting movement of short-run and long-term interest rates over this period further complicates any assessment of the link between monetary policy and the housing market.
Housing demand and home prices are, presumably, most closely linked to the 30-year fixed mortgage rate and the expected average borrowing rate to be paid over the life of adjustablerate mortgages.