Some of the lowest interest rates on record helped the nation's mortgage application numbers soar last week to the highest level seen in 15 months, which could be an indicator of strong economic growth to come. Refinancing a home loan at a lower interest rate is a method some people with good credit are able to utilize so they can have extra cash available each month to pay off other bills. By lowering monthly payments, homeowners at risk of default or foreclosure are often available to avoid these scenarios. This is not to say that those lacking good credit are without options, as they are easily guided through debt consolidation by any knowledgeable bankruptcy attorney, often able to keep their home.

The Mortgage Bankers Association reported its seasonally adjusted index of mortgage applications today. Included in the index are purchase loans and refinance loans, which saw a collective increase of 13 percent last week. The four week moving average, which aides to bring volatile weekly figures into greater focus, was up 2.6 percent. The seasonally adjusted index reported a 17.1 percent increase in applications for refinancing. This is the largest increase experienced since the week ending May 15, 2009.

Michelle Meyer, Senior U.S. economist at Bank of America Merrill Lynch, was quoted to speculate that cash freed by mortgage refinancing "could help support consumer spending, and therefore GDP, albeit only modestly." Given the current double-dip recession the U.S. is experiencing, even a modest bump to GDP would help everyone get back on their feet. The release of the first revision to Q2 GDP on August 27th is highly anticipated. Bank of America Merrill Lynch is forecasting the revision to decrease previous GDP estimates by 1.5 percent.

Not all signs are grim. One ray of light at the end of the recession tunnel was higher quarterly earnings reported today by one of the country's largest retail chains, Target Corp.
In the second part of this series, we will examine whether historically low mortgage rates will be able to positively impact Florida's housing market.

Source: ABC News "Home Refinancing Demand at highest in 15 Months" 8/18/10