Obama on the Dollar

Mortgage refinance rates have seen a steady drop for the last three weeks and that trend is likely to continue this week.  After the Federal Reserve Bank announced that is was going to continue its program to buy back US debt, the yield on the 10 year treasury rate sank.  The fall of the yield on the 10 year means that it is highly likely that mortgage rates are going to continue lower as well.  With lower interest rates, mortgage refinancing should see a spark.

Mortgage applications have seen a decline over the last few months, but it is very possible that we will see a huge jump in applications due to current home owners attempting to refinance at very low rates.  I would imagine that the jump in applications will be over 70% refinance applications because it seems that the new home buyer has just not come out of the woodworks quite yet.

The economy continues to struggle for this reason.  It is great that current home owners are getting the chance to refinance at extremely low rates, but it is going to take first time home buyers to really get the housing market off the ground.  By refinancing, home owners are putting more money in their pockets, but it is highly unlikely that they are using that money to put back into the housing market.  They are probably using it to pay off bills or to save for the future.

A major positive about the amount or refinance applications is the fact that it should put a positive image on the housing market.  If a new home buyer hears that a current home owner got a mortgage rate of 4.5% on their refinance, it is likely to increase the interest of a new home buyer.  The government is also ramping up their marketing plan to get new home buyers into the marketplace by placing internet and tv ads strategically.

Overall, now is one of the best times in history to refinance or buy that first home.  There are way too many great incentives to pass up this opportunity.  Use the internet and resources you have to educate yourself on the current housing market and get out there and save a bunch of money!

A friend of mine brought up an interesting argument recently and I wanted some clarity.  He said that President Obama, Ben Bernanke and Timothy Geithner are all working to push mortgage rates lower, but it is putting our country in huge amounts of debt.  He said that the Federal Reserve buying Mortgage Backed Securities will only make things worse in the future.  He then contradicted himself buying saying that the Treasury department auctioning off bonds will push yields lower which in turn will push mortgage rates lower.

I will never claim to be any type of economist, but I know many people that read this site are very educated to this type of stuff.  I also know that the Propeller community is very well educated about interest rates and especially the economy.  So I would like to ask, is my friend right?  Is Obama, Bernanke and Geithner creating artificial mortgage rates that will ending up hurting this country?  My opinion is that he is a typical arrogent conservative who wants to blame our current President for all the stuff that his president got us in to.  Please comment and let me know what the truth is…