Record-Low Rates Not Swaying Some Households

Mortgage rates are at record lows, but these rates aren’t motivating home buyers in huge numbers, nor are they successfully driving homeowners to remodel or take out money for other kinds of spending.

In previous recessions, lowering interest rates has driven the economy upward. What’s different this time around?

Mark Zandi, chief economist for Moody’s Analytics, points out that homeowners are wary. Two-thirds of any money saved is going toward paying down debt or building savings. Only a third is being spent.

“It’s going to take about three years to get back to normal,” says Patrick Newport, U.S. economist for IHS Global Insight.

Source: USA Today, Paul Wiseman, Stephanie Armour (09/29/2010)