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Mortgage refinancing: an essential step toward real estate recovery

On Monday, I wrote about last week’s figures from the Mortgage Bankers Association. It looked, I said, as if current record rates were boosting loan applications, which were 37.3 percent up on the same week last year.

However, I went on to say that more than three-quarters of all applications had come from those seeking to refinance existing mortgages, and that that might not be such good news.

I haven’t changed my mind. In an ideal world—or even just in a healthy market—there would be a whole lot more people wanting new mortgages, and many fewer wanting to re-engineer their existing ones.

But we already know that the market is not healthy. In fact, it is just the opposite. And, like any invalid, it has to take baby steps before it starts thinking of running anywhere.

Refinancing is just such a baby step. People have to rediscover their confidence before they start trading up or entering the real estate market. And that means an extended period of stability along with much lower repossession, and hardship rates.

We’re getting there. But it’s going to take a while.

In the meantime, I hope you have a very happy holiday.

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