Boston Fed's Rosengren Surprised Housing Market Hasn't Bounced

This man must live in an ivy covered ivory tower, since his comments reveal a misunderstanding about todays average consumer: No down payment saved up, not very good credit, and not enough income to qualify for the median priced home. As for refinances, it's not enough equity in their current home, as well as not very good credit. Lower interest rates isn't the cure, and it isn't even a bandaide. The cure is for lenders to be able to make loans and the consumer to qualify for borrowing, neither which are likely to happen any time soon in a greater capacity than we have at present.

This man needs to stop merely punching the clock and start catching up on industry news!!

You hit the nail on the head. People want to refinance to fix their situation, but the people that need it can't qualify. The people that will will qualify for a low rate have had good credit for a long time and already have a good rate. The people that were in sub prime mortgages were struggling before the current credit crunch. They have even less options now. Many of these people are in mortgages that they cannot afford regardless of the interest rate. They simply bought more home than they can afford. If they had poor credit before they bought a home, and now they are in a bad sub prime loan their credit situation is even worse. Lowering the rate by a quarter of a percent doesn't make much of a difference. Rates may be coming down, but that is for loans that no one can qualify for. A 680 credit score isn't even a good credit score any more. FHA was supposed to be the savior, but it is tough to find a lender that will go below 580. The fix needs to be a mortgage program that is easy to qualify for that people can afford.

I am in the Boston area. I can tell you that it has been hard hit but not as bad as other areas of the country. Boston isn't an island like some would like to think. It is effected by market movements, even downturns, just like any other city in America. Maybe not to the degrees of other cities, but it certainly feels the effects.

Here is the deal. Giving more money to a financially ignorant person does make them financially smart it just them more to be ignorant with. Stop handing out free money to the stupid. Giving books to someone does not make them smart. We need to let things take their ugly painful course. Let 70% of america file bankruptcy if necessary. Pain is a great teacher and we are doing all we can to avoid all pain. Let the pain begin... let the learning begin. We will be a stronger nation for it. Survival of the fittest is a great filter. Lets be a nation of "teach me's" we know a nation of "gimme" is not the answer.

IMHO, The US housing market is going to continue to slide until sometime after 2012 where it should falter after a series of false re-starts. I expect the market recovery to begin robustly sometime after 2015. The adjustment in the housing sector is a necessary evil, but will once again make housing affordable to those who pay their bills on time, don't job hop and can manage their finances. Housing market swings take between 4 to 6 years in a normal economy. The US is entering a recession, so I think you are looking at 8 to 10 years for a housing turn around. Real estate is a market driven commodity, and like any market, values go up and down (reality often overlooked). I think in the US, the average wage will settle in somewhere around $13.00 an hour, which will force people to come to grips with housing affordability and budgeting.

There are those who are in a subprime mortgage who should have read the paperwork, and did, only to miss something like a five year prepayment penalty listed descretly in the paperwork, and who knowingly allowed the broker to misstate their income so they could qualify, only to realize after they got into the mortgage that the payments were to high. Brokers should be responsible for the informaiton they give to the borrower and make sure they are understood. This is not to say that the broker is always the one who has to take the fall, but when a borrower relies on what a broker says, it should not always be the borrower who is referred to as "stupid" because he is in the loan. Additionally, if someone is in a sub prime mortgage which doesn't report and they need to get out of that mortgage but now their credit rating has fallen below a 580 there needs to be something out there in the main stream mortgage sector that can help them. If there was, then more people could refinance into mortgages they can afford at a decent interest rate and there would be less foreclosures. Even if you have a house that is worth $200,000 if your interest rate is at 12%, that means you are paying more than $2,000 a month. This is absolutely unacceptable that a broker would even attempt to talk someone into getting into this mortgage, especially with a five year prepayment penalty attached. Brokers need to accept responsibility for their actions as well as the borrowers.

How can the federal funds give away be seen as anything but a bank bailout at this point. Mortgage interest rates have only gone up. The author makes a good point, at what expense are these low fed funds dollars coming? Do we just let the whole thing fall? , teach those speculators and loafers a lesson? The banks are doing an abysmal job of handling and moving their forclosed properties. Could it be that they have more interest in government bailout bonus bucks than in US economic health? Yes, the government needs to do something ... something meaningful. Their ability to do so, however, is doubtful. This is a slow moving train wreck and thinking that it will be possible for any of us to steer clear of it as the engine leaves the track, is foolhearty.