Lets let everyone refi at 4%!!!
The idea has been around for years — and was pushed in 2008 by the smarter ones in the bunch called “the administration” …
This plan would not create debt / deficit.
It would make it extremely easy for everyone who owns a hone to refinance at these low 4% rates- to free up cash in the economy and boost spending.
Why this will be formally proposed in my opinion :
1. Added urgency – 2012 elections close and Obama wants to get reelected
2. the government said that prices of homes with government-backed mortgages fell 5.9 percent in the second quarter … down down again from a year earlier,
3. This drop is the biggest decline since 2009.
4. More than one in four families with mortgages owe more than homes value.
5. Some analysts and Realtors (like me) are now predicting waves of foreclosures and a continuing slide in home prices.
6. Real appreciation and return to equity dates for most are 5 or more tees away at best – causing a lack of mobility.
Administration discussions about housing proposals have taken on added urgency this summer because the housing market is continuing to deteriorate. On Wednesday, the government said that prices of homes with government-backed mortgages fell 5.9 percent in the second quarter from a year earlier, the biggest decline since 2009. More than one in five homeowners with mortgages owe more than their homes are worth. Some analysts are now predicting waves of foreclosures and a continuing slide in home prices.
“This is the best stimulus out there because it doesn’t increase the deficit, it accomplishes monetary policy, and it reduces defaults in housing,” said Christopher J. Mayer, an economist at the Columbia Business School.
“So I think this is low-hanging fruit.” Mr. Mayer and a colleague, Glenn Hubbard, who was chairman of the Council of Economic Advisers under President George W. Bush, proposed an early version of the plan.