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MIC investing is an effective way to generate yield while diversifying your portfolio from stocks, bonds and plain Jane real estate. But picking and choosing among MICs (mortgage investment corporations) isn't easy for a layperson. Most smaller investors must put all their MIC eggs in just one or two baskets.

That's where Alitis comes in. The Alitis Private Mortgage Fund is a fund of funds. It invests in a bunch of MICs, providing borrowers with expert management and diversification. (See its Globe and Mail Fund Profile)

There's finally bustling rate activity in the mortgage market. It only took a 100 bps drop in yields to wake most banks up.

Let's talk uninsured mortgage rates to start. Leading nationally-advertised 5-year fixed rates are back below 6% for the first time in two months. HSBC is leading the charge with its 20 bps drop to 5.94%.

In the insured market, 5.19% is the new standard from national lenders, but why stop there? Regional discounter Butler Mortgage has already cracked the 5% barrier. Butler is now advertising a bought-down 5-year at 4.99%. Other cut-rate mortgage shops won't be far behind.

Meanwhile, at the Big 6, where rates fall slower than feathers in an updraft, our channel check confirms that median discretionary rates are on the downswing:

The in-house lenders of major U.S. homebuilders are buying down mortgage rates like they're in a frenzy. It's become their go-to strategy to move new homes.

For example, America's largest homebuilder, D.R. Horton, offers rates a whopping 150 bps below the market. Smaller homebuilders with less assets and liquidity are like a mom-and-pop shop trying to price match with Walmart—they can't compete.

U.S. mortgage brokers and regular lenders can't compete either.

This isn't happening nearly as much in Canada. Take Mattamy, for example, North America's largest privately owned homebuilder. Its Canadian website features no mortgage discounts. Neither do the websites for a sampling of other top Canadian homebuilders we checked.

In a world where cheering for unemployment feels as wrong as anchovies on pizza, history has a twisted way of saying, "You want lower rates? Well, it's gonna cost you - jobs!" And in today's episode of 'As the Economy Turns', we've been handed yet another serving of that 'bad news casserole' we've developed a taste for.

Let's digest the mortgage consequences...