The New York Times reported today that a drop in mortgage rates has resulted in an increase in mortgage refinancing. According to the Times, the drop in rates was the result of a decision by the Federal Reserve to buy up $500 million in mortgage-backed securities. In addition, both the Times and CNNMoney.com have reported that the Treasury Department is looking into ways to drive mortgage rates even lower. The drop in interest rates, coupled with the nationwide decline in housing prices, just might convince people to jump back into buying homes. This would include not just people looking for a new place to live, but also investors looking to gobble up good deals. With the record number of foreclosures in this country it is important that these houses get back in the hands of people who will maintain them and find occupants for them. Lower interest rates certainly are not going to solve all of the nation’s housing woes, but they could be a good first step.

 

As the articles noted, lower interest rates aren’t going to help people who can’t afford their current mortgages, because only the most qualified borrowers will get the new lower rate. But there are many proposals on the table to help the millions of distressed borrowers, and hopefully our government will finally find the right plan and get it moving. There is no dispute that stabilizing real estate is critical to reviving our economy.