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.
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.