By September 24, 2012 3 Comments Read More →

Low Mortgage Rates, Ayn Rand & Why 80% Won’t Buy or Refinance

Mortgage rates have hit record lows and yet a majority of those who potentially could refinance and save money will not do so.

“Four out of five Americans are unwilling to buy homes or refinance their mortgages, despite record-low interest rates,” according to a recent Harris poll. “Only workers between the ages of 18 and 34 were slightly more likely to invest in housing over the next year.”

Just last week the rate for a 30-year fixed-rate loan sank to 3.49 percent according to Freddie Mac. The that’s the lowest rate Freddie Mac has ever recorded and less than even the 4.09% recorded a year ago, itself a ridiculously-low rate by historic standards.

Despite rates which ought to set off a massive refinancing trend many borrowers refuse to get new loans even though it’s in their best interest. The reason — according to a poll done by Harris Interactive for Union Plus, the benefits arm of the AFL-CIO — is that “53 percent of respondents have major concerns about the economy – they fear job loss.  Eighty three percent of respondents expressed concern that ‘closing costs for purchasing or refinancing a home are too high.'”

“With only 18 percent of working families willing to invest in buying new homes, what this poll tells us, first and foremost, is that we need to help working Americans feel confident about investing in housing,” said Union Plus President Leslie Tolf.

The reluctance of the working man and woman to enter the housing market, find a new home or refinance the one they have reflects a plain uncertainty about the marketplace.

Marketplace Stability

While the housing market has clearly shown signs of improvement during the past year there is the problem that unemployment remains high. For working people – including union members – marketplace stability is a more valuable commodity than rising home prices.

The reality is that the housing market works very well when everyone is finding success. We want entry-level buyers so they will purchase a first house. We want people who are selling that first house to move up and buy a better property so that the middle class can itself move up and find an even better home.

In other words the middle-class can’t move up unless there are replacement owners for the properties which those in the middle now own. It thus becomes very important if only as a matter of middle-class self-interest to assure that entry-level buyers have both the dollars and the confidence they need to enter the housing market.

That 47 Percent

The current political debate has within it an element which suggests that a large proportion of the American public is simply delighted to obtain housing assistance, public welfare and food stamps. Such an assertion assumes that individuals have no dignity, do not want independence and are positively joyful to receive government assistance.

Indeed, according to the thinking of  Ayn Rand we should let such people rot. As she explained, “if any civilization is to survive, it is the morality of altruism that men have to reject.”

But speak to people who are struggling and the first thing they’ll tell you is that they want to better.

No less important many of those who are seen as “poor” are actually “working poor.” They go to work every day and they’re not asking for a handout. They want to do better and as a society we should help with education and assistance in tough times. Even those who oppose altruism should favor such help because it’s in their self-interest to do so.

After all, the only way a poor person is going to buy that middle-class house is if they’re poor no more.


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3 Comments on "Low Mortgage Rates, Ayn Rand & Why 80% Won’t Buy or Refinance"

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  1. Joe says:

    I would be hard pressed not to classify this article as yellow journalism. You clearly have taken Rand out of context and are only focusing on the problem and not the cause. Business exists to make money. If the free market were allowed to work the prices of goods would be lower, businesses would cater to all demographics and just the rich and middle class. Inflation is caused by Government and policy not by unseen events.

  2. Peter G. Miller says:

    Policies have real consequences and the natural and inevitable consequences of Rand’s thinking would be a destruction of the social contract. It is cheaper to pay taxes then to deal with a breakdown in social arrangements.

    Even the king of Saudi Arabia gets the concept. To have support of the people he still has to provide benefits. Thus, while other states in the Middle East are beset by riot and civil war, Saudi Arabia is not. Perhaps it has something to do with the sudden additional $37 billion for “pay rises to offset inflation, unemployment benefits and affordable family housing” according to Reuters.

    See: http://www.reuters.com/article/2011/02/23/us-saudi-king-idUSTRE71M22V20110223

    The Saudis did the math and realized that $37 billion from the upper 1 percent was a cheap price for social calm. Besides, the king will never miss a meal or a palace as a result.

  3. You’re off-base about Rand, though. Completely. She never once said we should let people in trouble rot. She *said* that we should pursue whats really in our self-interest (which included helping people without destruction to ourselves) and not sacrifice ourselves to political or ethical ideologies that merely seek power over us. She was personally charitable – see her letters – and never said anything so miserable as to let people rot. She left that to the Communists and Fascists.

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