corporate - finance example is also consistent with what we have observed in markets in recent months. issuance of both investment - grade and high - yield bonds has been robust. indeed, domestic nonfinancial corporate bond issuance is on pace to set a record in 2012, and the speculative - grade segment may also register a new high for the year. at the same time, a large fraction of issuance has been devoted to refinancing – either to retiring existing debt or to payouts to equity holders via dividends and share buybacks. these uses of proceeds have accounted for about two - thirds of all issuance by speculative - grade firms so far this year. such patterns are what one would expect in a world of segmented markets and negative term premiums. 12 this caveat about the diminishing effectiveness of lsaps can be thought of as a specific version of goodhart ’ s law. 13 it may be that under normal circumstances, changes in 10 - year rates have significant explanatory power for economic activity, perhaps because they are a proxy for the expected future path of short rates or other aspects of financial conditions. but it doesn ’ t follow that when one sets out to influence the 10 - year rate directly, via asset purchases – without changing the future path of short rates – the usual historical relationships will continue to apply. while we should acknowledge these doubts, it is important to keep them in perspective. in addition to lowering interest rates, lsaps also boost equity prices and other asset values. taken together, these effects of lsaps seem likely to be meaningful, even if the benefits of an impetus to rates are less than in the baseline scenario sketched earlier. and to be sure, there is a wide confidence interval around any estimate we might make of the benefits. moreover, it is worth repeating a point made earlier : whatever direct hydraulic effects lsaps create by pushing down term premiums and discount rates, their overall impact may be reinforced via a signaling effect, whereby they enhance the credibility of our forward guidance about the future path of the federal funds rate. indeed, this signaling benefit strikes me as an important part of the argument in favor of lsaps in the current environment. let me turn now to the cost side of the equation. several potential costs of lsaps have been discussed. one is the exit problem – that a large balance sheet may make it harder for the fomc to raise rates when the time comes.

banks and also enacts borrower - based measures to mitigate the risks associated with boom - bust financial cycles. we view our mortgage measures that put ceilings on loan - to - income ( lti ) and loan - to - value ( ltv ) ratios as essential in limiting systemic financial risk, while acting to protect consumers from the risks associated with overborrowing. it is critically important to appreciate that our framework sets limits on the size of mortgages : the lti and ltv ratios are not targets but ceilings. in buying a home, a household should take into account the protections offered by putting down a higher deposit in terms of limiting repayment burden and risks associated with excessive debt levels. equally, lenders are required to assess the loan - bearing capacity of each mortgage customer and restrict the size of the mortgage if indicated by the analysis of the borrower ’ s credit risk. while the november 2016 revisions to the mortgage rules do raise the maximum loan size for first - time buyers seeking to buy homes above €220, 000 in value, it is important to take into account several considerations. first, borrowers also have to satisfy the lti requirement, which remains unchanged at a cap on loans of 3. 5 times income. for many households, this will limit the capacity to increase the mortgage size. second, to the extent that the revisions lead to an increase in aggregate mortgage credit volumes, this should be interpreted in the context of the subdued level of lending in the aftermath of the crisis. third, our framework is designed to avoid spiral dynamics between house prices and credit volumes. since the mortgage measures were initially flagged in late 2014, there has been a sharp moderation in expectations for annual gains in house prices, since it is widely understood that persistently - high rates of increase in house prices are not likely in a system in which measures place ceilings on lti and ltv ratios. in particular, the lti rule limits the capacity of house prices to grow too quickly relative to income levels, while the 80 percent ltv ceiling on loans taken out by second and subsequent buyers attenuates the feedback loop by which rising house prices increase the capacity of existing home owners to increase leverage. furthermore, our macroprudential regulations can be tightened if there is emerging evidence of elevated risks in the mortgage market, especially in relation to the rate of credit growth. finally, it is important to appreciate that many factors influence the dynamics of house prices. while rising incomes typically