There seems to be some renewed energy behind a housing proposal leaked early last week. It’s the plan to have the Treasury buy home loans from Fannie and Freddie if the loans are given at 4.5 percent interest rates. The Realtors are pushing the plan, desperate for any kind of home-buying incentive.
Apparently the incoming administration’s economic team is considering the idea, but wants to go further because the proposal wouldn’t really do much to help the foreclosure crisis. I realize I’ve already argued the point that a 4.5 percent interest rate is not going to be the full fix the housing market needs, so I won’t go there again, but we have to, once again, look at this from yet another updated perspective.
Mortgage rates have been dropping all week. They’re now somewhere just below 5 percent, in fact pushing toward that 4.5 on their own. The mortgage brokers I’m talking to say that has opened the floodgates on refis, and in fact the Mortgage Bankers Association weekly applications survey shows a big surge in refis even last week. But the brokers say it’s all refis, no new purchases.
