Blowback is the unintended consequences of an action, in this case is the government plan to have mortgage issuers voluntarily freeze rate for some ARM mortgage holders.
“I’ve never seen anything such as they’re suggesting here in my career,” said Lord Abbett’s Ezrati, who has worked in finance for 36 years. “It would be the equivalent of telling you the coupon [the interest rate] on a bond is being changed.”
Or like the government ‘persuading’ your bank to lower the interest rates on your saving account. Would you be likely to continue to bank there in the future? More probably, you would find a bank in another country if you could. The hot money that floats around the world looking for the best return won’t be coming to the US if the government makes their investments worth less.
This could mean higher interest rates with fewer lenders willing to lend. Which in tuurn would make homes harder, not easier, to get.