A mortgage refinancing boom is sweeping through parts of the US ravaged by the housing crisis, offering relief to strained household balance sheets in several states that will be pivotal to Barack Obama’s presidential re-election prospects. Interest rates have moved steadily lower over the past 18 months, allowing more people to take advantage of better borrowing rates on their home loans.
According to Freddie Mac, the government-backed mortgage company, the average 30-year fixed mortgage rate was 3.49 per cent this week, compared with 4.55 per cent in July 2011 and 5.05 per cent when Mr Obama took office in January 2009.
For those who succeeded in refinancing, this has translated into average savings of about $2,500 to $3,000 a year on mortgage payments.
“To be able to refinance is just like getting a tax cut,” says Mark Zandi, a senior economist at Moody’s. “It’s a very effective kind of tax cut that goes to high-to-middle-income households, and in many cases that money will be put to pretty good use [and pumped back into the economy].”
Mortgage refinancing applications jumped 134.5 per cent between June 2011 and June 2012, with states that suffered the most as a result of the housing crash witnessing the biggest gains, according to data from the Mortgage Bankers Association.
Refinancing applications in Nevada jumped 368.8 per cent in the year to June, and 247 per cent in Florida. Both of these “sunbelt” states are expected to be big political prizes in the presidential contest in November between Mr Obama and Mitt Romney, his Republican challenger.
Mr Obama holds a narrow lead over Mr Romney in national polls. His advantage is equally tight in Florida, where he is ahead by 1.1 percentage points, according to an average from the RealClearPolitics website. In Nevada and Ohio, the president holds leads of 4.5 and 4.3 percentage points respectively.
It is likely that the refinancing boom will continue, although there is some concern that lenders may already be at full capacity in terms of processing the applications. Mortgage rates could well continue to drop, particularly if the Federal Reserve decides to engage in more easing of monetary policy.
Eric Jotkoff, a spokesman for Mr Obama’s campaign in Florida, said: “Mitt Romney believes the housing market should ‘hit the bottom’ and thinks struggling homeowners who have acted responsibly and have played by the rules should be on their own.”
But Amanda Henneberg, a spokeswoman for the Romney campaign, said: “Romney is focused on making sensible changes that will get credit flowing again so the housing recovery can begin in earnest.”
According to Freddie Mac, the government-backed mortgage company, the average 30-year fixed mortgage rate was 3.49 per cent this week, compared with 4.55 per cent in July 2011 and 5.05 per cent when Mr Obama took office in January 2009.
For those who succeeded in refinancing, this has translated into average savings of about $2,500 to $3,000 a year on mortgage payments.
“To be able to refinance is just like getting a tax cut,” says Mark Zandi, a senior economist at Moody’s. “It’s a very effective kind of tax cut that goes to high-to-middle-income households, and in many cases that money will be put to pretty good use [and pumped back into the economy].”
Mortgage refinancing applications jumped 134.5 per cent between June 2011 and June 2012, with states that suffered the most as a result of the housing crash witnessing the biggest gains, according to data from the Mortgage Bankers Association.
Refinancing applications in Nevada jumped 368.8 per cent in the year to June, and 247 per cent in Florida. Both of these “sunbelt” states are expected to be big political prizes in the presidential contest in November between Mr Obama and Mitt Romney, his Republican challenger.
Mr Obama holds a narrow lead over Mr Romney in national polls. His advantage is equally tight in Florida, where he is ahead by 1.1 percentage points, according to an average from the RealClearPolitics website. In Nevada and Ohio, the president holds leads of 4.5 and 4.3 percentage points respectively.
It is likely that the refinancing boom will continue, although there is some concern that lenders may already be at full capacity in terms of processing the applications. Mortgage rates could well continue to drop, particularly if the Federal Reserve decides to engage in more easing of monetary policy.
Eric Jotkoff, a spokesman for Mr Obama’s campaign in Florida, said: “Mitt Romney believes the housing market should ‘hit the bottom’ and thinks struggling homeowners who have acted responsibly and have played by the rules should be on their own.”
But Amanda Henneberg, a spokeswoman for the Romney campaign, said: “Romney is focused on making sensible changes that will get credit flowing again so the housing recovery can begin in earnest.”
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President Barack Obama meets with Val and Paul Keller in their home, Friday, May 11, 2012, in Reno, Nev. |
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