Mortgage rates stay low, as does consumer confidence

Despite the Federal Reserve promising to keep mortgage interest rates low until mid 2013, poor consumer confidence continues to restrain the housing market. According to The New York Times, the Fed's decision to announce its plan to keep rates low may have encouraged many potential homebuyers to hold off on larger purchases until the economy starts to show signs of recovery.

In an interview with the news source, Mark Zandi, chief economist of Moody's Analytics, said he does not believe lenders will be looking to extend debt, and households will be avoiding large purchases in the current economic environment. Moody's Analytics researched data from the Federal Reserve and Equifax and found the proportion of after-tax income spent on keeping up with loan payments has decreased from 14 percent in early 2007 to 11.5 percent now, but household debt remains high.

Guy Cecala, publisher of Inside Mortgage Finance, told NPR refinancing mortgages would help U.S. homeowners save money and boost the economy, but the financial system is making it difficult for people to qualify.

"Ironically, the people who are looking to refinance are the people who may have refiles two years ago and qualified," Cecala told the news source.  

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