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Realtors Propose Buy-Down Program With 1% Rate Drop

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By SHANNON BEHNKEN | The Tampa Tribune

Published: November 7, 2008

The economy won't heal until the housing market improves, and that's going to take government intervention.

That's what Lawrence Yun, chief economist for the National Association Realtors, told thousands of real estate agents at the organization's annual conference this morning in Orlando.

Yun said he hopes the new U.S. administration will make housing a major part of the next economic stimulus package.

"When this market stabilizes, economic recovery will follow," he said "We need to get buyers in the market to absorb this inventory."

The new administration hasn't completely formed yet, but Yun said his group is already planning a proposal it wants passed. Yun said he'd like the government to offer a mortgage-interest buy-down program that would lower mortgage interest rates by 1 percent.

He said he'd like to see mortgage rates as low as 4.5 percent, but a 1 percent drop would be a good start. Mortgage rates currently hover at about 6.5 percent.

Of course, he said, some buyers are holding back on making home purchases because they don't want to miss out on incentives the government may offer later. This proposal may cause some buyers to wait even longer, he said, and that's why the government needs to act fast.

"Something has to be done soon."

The buy-back program Yun proposes would be offered for one year, and all buyers of primary homes would be eligible. Once approved, the mortgage discount would last for the life the loan.

Reporter Shannon Behnken can be reached at (813) 259-7804.

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