Refi’s rock but expansion of activity not happening

Historically low interest rates finally moved the needle for refinancings as the MBA said they rose 17.1% for the week to the highest since May ’09. Purchases however can’t get out of their own way as they fell 3.4% and are just 3.5% off the lowest level since 1997. This economic response to low rates is indicative of our whole economy that has the Fed now pushing on a string. In times of deleveraging, lower rates only encourage refi’s, not new economic activity whether the purchase of a home or the expansion of a business. ABC confidence rose 2 pts to -45 and is now 1 pt above its 1 yr avg. Portugal sold 3 mo and 12 mo bills and raised more than expected. Fitch did a stress test on the important European insurers and said they passed “based on the hypothetical scenario of a default on Greek government debt” and its “knock on effects on the sovereign debt of Portugal, Ireland, Spain and Italy.”

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