Historically low interest rates finally moved the needle for refinancings as the MBA said they rose 17.1% for the week to the highest since May ’09. Purchases however can’t get out of their own way as they fell 3.4% and are just 3.5% off the lowest level since 1997. This economic response to low rates is indicative of our whole economy that has the Fed now pushing on a string. In times of deleveraging, lower rates only encourage refi’s, not new economic activity whether the purchase of a home or the expansion of a business. ABC confidence rose 2 pts to -45 and is now 1 pt above its 1 yr avg. Portugal sold 3 mo and 12 mo bills and raised more than expected. Fitch did a stress test on the important European insurers and said they passed “based on the hypothetical scenario of a default on Greek government debt” and its “knock on effects on the sovereign debt of Portugal, Ireland, Spain and Italy.”

Category: MacroNotes

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4 Responses to “Refi’s rock but expansion of activity not happening”

  1. chartist says:

    A friend of mine refinanced his $1.2 million mortgage recently. Only the recent appraisal came in $140K below his purchase price and mortgage value since he financed 100% of the purchase. Yes, he bought at the top….But, he decided the lower rate was better than what the stock market would deliver so he sold his 401K and refinanced his home.

  2. ashpelham2 says:

    Chartist: Was his mortgage and purchase price still the same? Was this a very recent purchase originally? The reason I ask is that I also did a 100% purchase-finance, but mine was 7 years ago. I’m thinking about refi, and property prices have held fairly level. Not sure what an appraisal would bring up, but the house next door sold for about 10,000 more than I paid back in late 2003, just this past winter. What my thinking is refi for 20 years, instead of the 23 I still owe, take no cash out, perhaps eliminate PMI and thus lower my current mortgage. Closing costs would be possibly a problem for me…

  3. chartist says:

    He bought at the top in 2008.