No, the FED does open market operations at around that time. They are printing boatloads of $$ and buying up long bonds.
The FED CANNOT allow mortgage rates to cross 7%, as it would result in a housing crash and a depression/recession. So they will continue to keep long term interest rates below 7% for another 3-4 years, while wages increase and make houses affordable again by 2010 or so.
The liquidity will not stop, and stocks will continue to make new highs.