I’ve been thinking about what rabbit will save the market, or at least delay the market long enough to make everybody doubt the overvaluation of the market.

We’ve made a fairly big stink about the borrowers that are going to get pinched on their exotics, and while the MBS market is starting to get rocked, exotics and refinancing hasn’t slowed.

At the same time, the banks are in denial about the softening of the marketing in terms of pricing and are readily approval appraisals at still or near peak pricing.

Combining the two, is it possible that we will have seen a large spike in refi’s of people that originally bought in 2003, 2004, 2005 in in Q1 ’07 since rates are soft?

The buyers in ’03,’04,& ’05 can probably all claim paper equity if they haven’t already refi’d it out. If with neg equity due to an option loan, a broker that wants the deal could probably make the appraisal and loan for the ’03 & ’04 buyers and maybe the ’05. In 2005, only 1 in 9 people refi’ing did it to get cash.

SD is in worse shape than LA/OC, I’d suspect most in La/OC could still refi even if they’ve gone neg-equity since their loan due to the market “holding up”.

Could the readily available refiance ability combined with the deluded market perception, be the rabbit that allows the genie to stay in the bottle for another 3 years?

Does anybody have relible stats for 2006 mortgage and refi activity either nationally or SoCal local?