Lately there has been a renewed interest in finding ways to finding ways to help the housing market, which is one of he major obstacles to overcome before we see an upswing in the nation’s economy. Many remedies can be implemented by the Obama administration without Congress or the Federal Reserve.
The Obama Administration could help the housing market a great deal by working out a way to lower the standards required for homeowners to be able to refinance their homes. With mortgage rates at record lows, allowing homeowners to refinance the home mortgages could save these borrowers thousands every month. According to the most recent weekly survey of mortgage rates conducted by Freddie Mac for the week ending September 29, the average for a 30-year fix rate mortgage was 4.01%. That posting brings the average 30-year fixed-rate to a 50 record low.
Despite the record low rates, 28 million mortgages that are in a database maintained by CoreLogic carry a mortgage rate higher than 5.1%. This database comprises 85% of all mortgages across the nation. Of that 28 million, 19.9 million have at least some equity in their homes and the remaining 8.1 millions have no equity in their homes and the remaining 8.1 million have no equity left. Still, all of these homeowners could benefit by refinancing their homes, and none of the homeowners has done so.
According to estimates done by the Congressional Budget Office, refinancing at current rates would save these 28 million homeowners more than $2,600 each in just the first year. Take that amount and multiply it by the 28 million homeowners that could benefit from refinancing at a lower rate – that we know about thanks to CoreLogic – and that adds up to tens of billions of dollars. Tens of billions that could be spent by consumers, creating more jobs and bolstering the nation’s economy.