Refi Applications are "Through the Roof"

The Dallas Morning News reports:

“The holidays can be slow in the mortgage business as consumers take a break to celebrate.

“But at Gary Akright’s Addison mortgage office, the phone is ringing off the wall.

“The lowest loan interest rates in more than a generation have prompted thousands of homeowners to refinance.

“But so far, there hasn’t been a similar uptick in purchases.

“We are seeing a lot of activity,” said Akright, president of Dominion Mortgage Corp. “We are offering 30-year fixed rate loans at 4 7/8 percent right now, and that’s great.”

“As home mortgage rates have fallen to their lowest point since the 1960s, the cost of financing a home has fallen more than a full percentage point since this time last year.

“The drop results in savings of more than $100 a month on payments for a $150,000 loan.

“No wonder applications to refinance homes have jumped more than 500 percent nationwide since October.”

We’re going to see more of these stories in 2009. Even though the housing market is still in shambles, consumers are taking advantage of lower rates to refinance their mortgages. This, combined with lower gas prices at the pump, is acting as a huge relief for consumers. Whenever you put more money in consumers’ pockets, they tend to spend it quickly. This may not be enough to pull us out of recession, but it is acting to cushion the blow.

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