NEW YORK (CNN/Money) - The fruits (source?) of Mr. Greenspan's frustrating bond market conundrum are illustrated in today's weekly numbers from the Mortgage Bankers Association.

The 30-year fixed rate fell to 5.55 percent last week from 5.61 percent the week before -- that's because the U.S. government bond market has rallied again and bond yields have fallen. This has spurred a jump in refinancing, just as MBA chief economist Doug Duncan told me last week it would.

When people refinance they get more money to do other things, for some of us it's a fancy kitchen remodel, for others it's paying of big credit card bills or scraping together college tuition for the kids. In any case, it's stimulative to the economy.

And you see, that's why Mr. G is frustrated.

He has led the Federal Reserve in a steady series of short-term rate hikes because he thinks low rates are juicing the economy too much. But as the Fed does that, long term rates have fallen sharply. And lower long-term rates are stimulative too.

What's a Fed chairman to do?

Keep hiking short-term rates so high that bond investors have to see the light, see that inflation is brewing and long-term bond yields shouldn't be so low? Or hope that the inflationary pressures they are going to subside as the LAGGED effect of all those short-term rate hikes gradually take hold? Meanwhile homeowners are taking advantage of 30-year fixed rates many thought they'd never see this low again. Greenspan's vexing conundrum is their satisfying opportunity.

Get the latest mortgage numbers and real estate outlook here.

______________________________

-- Kathleen Hays is economics correspondent for CNN and contributes to Lou Dobbs Tonight.