Rising Home Prices and Mortgage Activity Show Recovery for the Economy and Personal Finances, Says Strategic Consulting Services
Affordable housing and mortgages took a back seat last month in the State of the Union address by President Obama; however housing has recently been a focus of government policy. The Consumer Financial Protection Bureau (CFPB) announced a series of actions protecting homebuyers and further promoting homeownership to aid the economy. The CFPB actions include: changes to mortgage disclosures, proposed expanded foreclosure protections, launching new borrower tools including a Rate Checker, and announced another $35 million in fines for illegal mortgage lending practices.
These actions are timely, coming as housing prices are growing and interest rates are historically low. The Federal Housing Finance Agency (FHFA) House Price Index this month came within five percent of the prior peak level in 2005. This gives hopes that home prices could now grow beyond their pre-housing bubble levels. Meanwhile, the low interest rates in January caused a jump in mortgage activity, with the Mortgage Bankers Association survey showing a 22 percent jump in refinance inquiries and 66 percent increase in new loan applications. In December U.S. home sales grew 2.4 percent and market conditions are favorable for stronger home sales in 2015.
These conditions are important for individual consumers and the economy. The wealth of most low-income homeowners before the Great Recession was tied up in home equity in a time when personal incomes declined and mortgage debt expanded. When home values slipped below the loan amount, homeowners got behind on their mortgage payments, then home foreclosures piled up, and the national average for consumer spending dropped by almost 20 percent. The connection of home values to mortgage delinquencies shows the important role of debt forgiveness, non-profit counseling agencies, and debt management programs as macroeconomic strategies to avoid a financial crisis or recession the future.
"Housing has been the backbone of the American economy for decades, providing liquidity and equity to the middle class. Homeowners in some regions saw a 200 percent increase in home values before the housing bubble and subprime mortgage collapse. As a result of aggressive refinancing programs, the country then experienced record foreclosures and bankruptcies. Now that home prices are improving, the question is whether current protections and industry changes are enough to prevent a future financial crisis and recession," says Ben Kittle, Senior Financial Consultant at Strategic Consulting Services. "A home and mortgage is the most important investment most families make. This is why we need strong protection and legislation with true safeguards that prevent taxpayers footing the bill for a housing crisis ever again, keeping the dream of homeownership alive for future Americans generations."
About Strategic Consulting Services
Strategic Consulting Services is a financial services firm with teams specialized in Debt Management, Mortgages and Business Services. With a comprehensive client-focused approach, the Company provides assessments looking beyond immediate financial issues to help clients build greater financial strength with smart habits and choices. Since 2007, Strategic Consulting Services has helped individuals and small businesses create savings plans, reduce debt, and make wiser spending choices. For more information visit www.strategiccs.org.
Strategic Consulting Services Staff
Strategic Consulting Services