Turning a Corner??
Mortgage rates barreled lower a second straight day today, dropping from 5 5/8% to 5 3/8% for thirty year loans.
That brings the two-day drop to almost a full point, roughly equivalent to a 1,000 point rally in the Dow Jones average — which, not coincidentally, is what the stock market gained the last few days.
While it’s true that lower rates don’t help homeowners with negative equity or wrecked credit, they’re a boon for millions of other Americans.
Consider who benefits:
–Virtually overnight, prospective home buyers have 10% more purchasing power.
–Home sellers suddenly have a bigger pool of buyers who can afford their home.
–Existing homeowners with mortgages above 6% can refinance, using the savings to buy other things. In turn, strengthened consumer demand helps bolster an economy in recession.
–Banks and loan officers have a wave of new business to accommodate (I’d much rather see banks make money the usual way — making loans — than need bailout money from taxpayers).