As the country endures the current economic crisis, the housing market is showing small signs of revitalization. Mortgage applications have seen nearly a 300% increase from this time last year as interest rates drop. In an effort to make housing costs more affordable, the US Treasury has committed to fueling the mortgage-backed securities market, thus driving interest rates to industry record lows. Cash sensitive, American homeowners have rushed to refinance their homes into lower interest rates. The current average 30 year fixed mortgage interest rate now rest at 4.75%, which is lower than last year’s 6% average. For homes with sufficient equity to refinance, the 1.25% decrease in the average mortgage interest rate will enable refinancing homeowners to save approximately $1000/year per $100,000 mortgage balance. Although mortgage applications are up, fewer than 20% of the new applications are for home purchases.
A major point to correcting the slagging economic market needs to remain focused in protecting a core of human existence, shelter. Fortunately, it seems the new executive administration has focused efforts on housing and allowed it to take as large a role in the recovery of the economy as it did during its fall. Without sufficient and affordable housing, consumer confidence will remain low and the economic recovery for the nation will be slow at best.