Full blown deflation is here: the 30 Year Freddie fixed rate mortgage just dropped to a fresh new all time low. The problem - not even record low mortgage rates are incentivizing consumers to buy homes. This is a complete disaster for the Fed which is now facing outright deflation in the face and will be forced, without debate, to monetize and launch another round of QE very shortly, as this trend suicidal to the banks' bloated balance sheets. If home prices continue dropping, look for the next Flow of Funds report to be a massacre for household net wealth. The nuclear option: giving away houses for free. Yet with yesterday's announcement by the GSEs that they will lock out any strategic defaulters, this has all the makings of a disaster for the administration.