Positive Signs in the Housing Marketby Tim Manni
Mortgage applications rose for the first time in three weeks, as interest rates dropped for the week ending May 2. Both purchase and refinance applications were up; experts are hoping this trend will continue in this critical spring home-buying season. According to the Mortgage Bankers Association, mortgage applications rose 15.6%, as purchase applications shot up 12.1% and refinance applications rose 19.3%.
U.S. Treasury Secretary Henry Paulson believes markets are beginning to emerge from the credit crunch. “I do believe that the worst is likely to be behind us,” said Paulson in one of the most positive statements to come out of the Bush administration regarding the economy in some time. Paulson believes Congress will likely soon pass two initiatives vital to stimulating the housing market – an improved regulation of Fannie Mae and Freddie Mac, two government-sponsored mortgage companies, and the overhaul of the Federal Housing Authority (FHA).
The House is due to begin debating the latest housing rescue bill today. The government has come under fire for their momentous bailout of Wall Street giant Bear Stearns, and their lack of aid for the American homeowner. The bill offers tax credits and a cash infusion to buy up abandoned homes and help an estimated half million homeowners facing foreclosures, as well as the FHA guaranteeing $300 billion in home loans. Critics fault the plan for putting too much government money at risk.