I think Mr Mortgage hits on a very important point, refi’s tend to need equity to get the deal done. That train has left the station for many people now.
With unemployment rising and home prices dropping, who wants to risk entering the market even if rates are low and prices are down. It’s still a big debt load on a depreciatiing asset that is highly iliquid. Not the kind of move most people make that dont have a warm and fuzzy feeling about the economy.
So here’s our conundrum, those in,cant get out, those out, dont want to get in. Not much of a market.
If the govt hurry’s and nationalizes the mortgage market at say 2% interest, 100% LTV on all existing mortgages, no doc needed. That would probably put a floor under it for a while. What, maybe $12T in total? This would go a long way towards helping the problem.
From a purely investment point of view, one should never buy into a very leveraged position until there’s strong confirmation of an uptrend in both the investment and the general economic conditions. This is basic successful investing. Anything else is exremely risky investing. Bottom fishing in real estate is not wise. It’s way too expensive to be wrong.