The Financial Times' James Politi proposes an interesting theory: The Obama administration's recent tweaks to its housing rescue initiative may end up disproportionately helping the incumbent in swing states crucial to the election.
That's pretty clever, if it was intentional, or just plain good luck for Obama, if it wasn't. But it's not entirely clear how much credit the administration should get.
There's no doubt that a series of changes pushed through by the White House and the Federal Housing Finance Authority have made it easier for underwater homeowners to refinance their mortgages. The revamp was long over due, but better late than never. It's also self-evidently obvious that the states that were hit the worst by the housing bust would be the states where homeowners could benefit most from refinancing help. Florida and Nevada are two such states, and they are, as the Financial Times puts it, "big prizes" in the general election.
Mortgage refinancing applications jumped 134.5 per cent between June 2011 and June 2012, with states that suffered the most as a result of the housing crash witnessing the biggest gains, according to data from the Mortgage Bankers Association.
Refinancing applications in Nevada jumped 368.8 per cent in the year to June, and 247 per cent in Florida. Both of these “sunbelt” states are expected to be big political prizes in the presidential contest in November between Mr Obama and Mitt Romney, his Republican challenger.
Ohio and Michigan are also registering a refinancing wave.
But there's another, simpler reason why homeowners everywhere are rushing to refinance. Mortgage interest rates hit an all-time low of 3.49 percent this week. Even if you refinanced as recently as a year ago, it may still be smart to refinance again, whether or not you are underwater on your loan.
And the reason why mortgage rates are so low is hardly reassuring.
From the Christian Science Monitor:
Mortgage rates have been dropping because they tend to track the yield on the 10-year Treasury note. A weaker U.S. economy and uncertainty about how Europe will resolve its debt crisis have led investors to buy more Treasury securities, which are considered safe investments. As demand for Treasurys increase, the yield falls.
For the people who are refinancing, saving a couple of thousand dollars on their annual mortgage payments is an unambiguously good thing. And if the latest iteration of Obama's attempts to help homeowners ends up improving his chances to win in in Florida, well, that's certainly good for the Obama campaign. But the underlying forces that are most profoundly affecting mortgage rates -- Europe's woes, the slowing U.S. economy -- aren't good for anyone at all, with the possible exception, I suppose, of Mitt Romney.