A 4.5 percent mortgage rate means nothing for a person without a job, and unemployment is increasing alarmingly.
Still, the housing industry likes the sound of the plan, reportedly being pushed by Treasury Secretary Henry M. Paulson Jr., that would cut rates to 4.5 percent. The experts have already calculated results.
"We predict that it will immediately sell 500,000 houses," said National Association of Realtors spokesman Walt Molony, speaking for the 1.26-million-member group.
The scope of the problem? There are 4.3 million existing homes for sale nationally, 48,000 of them in the eight-county Philadelphia region.
Last week, the Fed said it would lower borrowing costs for buyers by assuming $600 billion in debt issued or backed by Fannie Mae and Freddie Mac. That resulted in an almost-immediate fixed-rate decline of 43 basis points.
Even the 5.53 percent 30-year fixed rate that Freddie Mac reported yesterday - down almost a percentage point since the last week of October, according to Freddie Mac chief economist Frank Nothaft - has been enough to increase refinancing and bump up home sales slightly.
Conventional mortgage applications jumped 150 percent nationally over Thanksgiving week, and refinances surged 300 percent.
"Roughly three out of four mortgage applications were for refinance transactions, up from around half during the prior week," Nothaft said.
Refinancings have been increasing in the region since last week, although tighter credit rules in effect since the subprime meltdown in August 2007 have limited the effects.
"We had a nice surge of refinances on Tuesday and Wednesday [last week]," said Jim Goldsmith, branch manager of Gateway Funding in Horsham. "We typically track rates for past clients and notify them when a rate drop makes refinancing beneficial. Several applied right away."
