X1Y2Z3 I thought you had a very cool post and I enjoyed reading it.
ybc I am not a mortgage broker but my speculative answer would be as follows…(x1y2z3 or anyone else feel free to correct me on alot of what I am about to write)
– Long term mtg rates are not based on the prime. As a barometer I use the 10 year treasury yield and add 1.3 to come up with an approximate standard 30 year conforming rate.
– Most (if not all) HELOCs ARE prime rate based.
– So yeah actually two things may help those people who are in big trouble. First off if the recession we all discuss does indeed happen then we may indeed see the 10 year treasury dip down again or at least stay low. If it does then that would be good for mortgage rates.
– If the fed does indeed lower the prime it will at least REDUCE some of the runaway HELOCs that people are now started to get hammered on.
HOWEVER… even if long term rates go down or stay at a decent value, if your home doesn’t appraise then you will need to come up with cash to refinance and get out of your ticking time of a mortgage.
So my humble opinion is that yes the recession could indeed help people out but it is hard to pinpoint how many will be saved. It all depends on how much depreciation occurs prior to the homeowner wising up and dealing with the problem.