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Government Skews Market, Foreclosure Rescue Linked to Drop in Mortgage Applications

Anthony Randazzo
March 4, 2009, 2:55pm

More details on the White House plan to rescue struggling homeowners were released today. This USAToday/Reuters report has a rundown of the new details.

Interestingly, the article points out that mortgage applications and mortgage refinancing applications "dropped for a second straight week last week as potential borrowers held back in hope of even lower mortgage rates and help from the Obama rescue program. The Mortgage Bankers Association's total applications index slid by nearly 13% to about half the level it had reached earlier this year when loan rates fell to 4.89%."

No clearer evidence can be presented than this to show how government activity skews the market. The announcement of the plan may actually be what makes it necessary to even have the plan in the first place. Meanwhile, businesses are suffering losses that are unnecessary for the moment because of the government activity... and in the middle of a recession no less.

Not helpful.


Anthony Randazzo is Director of Economic Research


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