The Fed's increase in securities purchases is expected to cause interest rates to fall even further. The Fed is not targeting specific rates for either 10-year Treasury rates or rates on 30-year fixed-rate mortgages, but merely just having the Fed bid in the market for a sustained period is enough to deliver a 50 basis point refinance incentive for many home owners for several months, Jay Brinkmann, MBA's Chief Economist and senior vice president of Research and Economics, says in a prepared statement.

It is safe to assume that the Fed was hoping to stimulate such activity with its latest plan to jumpstart the economy. However there are concerns about the volume of cash it is pumping into the system. The plan will increase the assets held by the Fed to more than $3 trillion, or 50%. There are questions about the Fed's exist strategy--how and to whom will it sell these assets and whether the money will create a surge of inflation.

There are also calls for a focus on other issues by the Fed as well as Treasury. Buying Treasuries right now is counter-intuitive, Lawrence J. Selevan, principal of Chesterfield Faring, tells GlobeSt.com.

"Treasuries retain an AAA rating, with new issues of approximately $1.7 trillion for fiscal 2009, and Treasuries are retiring now with higher yields than new issues. Buying non-defaulted MBS would also seem like a waste of focus," he says.