Greenspan says Fed didn't cause the housing bubble

(Reuters) - Former U.S. Federal Reserve Chairman Alan Greenspan said lower rates on long-term, fixed-rate mortgages and not the Federal Reserve's policies are to blame for the U.S. housing bubble.

"Between 2002 and 2005, home mortgage rates led U.S. home price change by 11 months. This correlation between home prices and mortgage rates was highly significant, and a far better indicator of rising home prices than the fed-funds rate," Greenspan wrote in the Wall Street Journal.

Greenspan went on to explain that the fed-funds rate applies only to interest charged for the front side of US currency, where the president's likeness appears, while mortgage rates are based on the obverse or back side of the bill and, as a result, there is no linkage between the rates.