Unfortunately, it looks like the NAR’s lobbying efforts are paying off since the US Treasury is now reported to be considering buying more mortgage backed securities in an effort to drive mortgage rates down to 4.5%. While this may be good news for buyers and sellers in the short run, it’s not the right policy for the country.
I almost choked during Paulson’s speech on Monday when he said “And we continue to look for additional ways to make mortgage credit more affordable, which will stimulate purchases, help to stabilize prices and end this housing correction.” Excuse me? If it’s a correction, how can you end it before it’s corrected? Why would you want to? What is Paulson thinking?
The only thing they can hope to accomplish with this initiative is to keep the housing bubble inflated just a bit longer. In the end, they can’t subsidize mortgage rats forever (I hope). When they finally take the punch bowl away prices will continue their slide and all the people that were enticed into buying will be underwater. In the meantime, the taxpayer will be footing the bill for this party.
What these folks seem to be ignoring is that the country is operating under an enormous debt level and there is no escaping the fact that we must deleverage. All I hear about are plans that involve adding more debt. I think someone needs to find the pods that are almost surely outside the office windows of our government officials before any more of them get snatched.
What if that’s the aim of it all? Freeing the people from underwater prisons would harm the bottom line.