Battered Housing Market Gets Booster Shot

For the battered housing market, it's a badly needed booster shot.

"This is crazy," said Atlanta mortgage broker Laura Sosa-Rocha.

Sosa Rocha says falling mortgages rates have triggered a rush, reports CBS News correspondent Anthony Mason.

"By 8 a.m. I had about 29 emails by people who wanted to lock in," she said.

The 30-year fixed has dropped below 5 percent; the 15-year fixed has hit its lowest level in more than 5 years. The fall came after the Fed said it will pump another trillion dollars into the economy to try the pull it out of a nosedive.

"It's very hard to pull out of these things quickly," said Harvard University's Ken Rogoff.

Rogoff is coauthor of a new study on the impact of severe financial crises. Looking at 66 major crises, he found that on average:

  • stocks fall 55 percent
  • house prices fall 35 percent (we're already at or near those levels)
  • unemployment rises 7 percentage points

    "If we keep following in the tracks of past financial crises, having unemployment reach 11 or 12 percent by the end of 2011," Rogoff said.

    But the scariest statistic in Rogoff's study is what happens to government debt, which rises on average 85 percent.

    "So in the case of the United States that's $8.5 trillion within 3 years," Rogoff said. "i don't know about you but it seems to me we're on track for doing that."

    The key to recovery is fixing the financial system. If we don't, Rogoff says, the economy could twist in the wind for a decade.