Summary
The 11% increase was fueled by first time buyers and the refinancing of performing mortgages. It is a fact that first time buyers are in the marketplace taking advantage of market incentives so are home owners with good credit refinancing existing mortgages. So what does the 11% jump signify? My opinion is that this jump does not directly help the lagging home market. The article is touting Mr. Oboma's programs as the reason for this activity but it's another allusion without significant clarity to directly point to a change in the lagging home market or even justify Mr. Oboma's programs just cheerleading without a score.
Analysis
It is a natural occurrence for home owners to refinance their existing higher interest mortgages when the rates are around 4.67% but how is this related to a stimulus of the housing when in fact home owners are exchanges high interest mortgages for lower rates and reducing the income of banks which creates more uncertainty in the banking industry.
Regarding first time buyers this buyer profile was attracted by lower home prices, lower interest rates and possibly the $8,000 first time home buyer tax credit which is the only program that can enhance but not be the actual cause of first time buyer activity.
The refinancing of performing mortgages and first time buyers does little to spur a recurrence of the housing market. Example, the $8,000 tax credit excludes many buyer profiles such as divorced single parents who previously owned a home and may be renters and seniors renters who previously owned homes. The incentives should not have been limited to first time buyers but to all buyers so stimulus could occur in the marketplace.
Lets be real a buyer who is in foreclosure or late in payments will not have the credit history to refinance a new mortgage especially if the buyer was unqualified for the initial mortgage and remains unqualified for a refinance.
The article lacks creditable information as to how the 11% increase impacts and stimulates the real estate market. As I said previously it cheerleading without a team score.
