WASHINGTON, Aug. 25 (UPI) -- A plan to support refinancing for U.S. homeowners would give the economy a cost-effective shot in the arm, a Columbia Business School professor said.
As the Obama administration considers plans to back refinancing for homeowners, the lower interest rates available could provide homeowners with an additional $85 billion over the course of the year, The New York Times reported Thursday.
Christopher Mayer, an economist at the Columbia Business School in New York, said, "This may be the best stimulus out there because it doesn't increase the deficit, it accomplishes monetary policy, and it reduces defaults in housing.
"So I think this is low-hanging fruit," he said.
Frank Nothaft, chief economist at the U.S. Federal Home Loan Mortgage Corp., said, "It almost seems to me you want to have some type of announcement or policy, program or something from the federal government that provides that clear signal that we are here supporting the housing market and this is indeed a good time to really consider buying."
Officials are considering a new refinancing policy and expanded support for a rental policy, the newspaper said.
The goal is to reach as many homeowners as possible, but do it cheaply. If the program was also a stimulus measure, giving consumers more money to spend elsewhere, in theory that would make the economy grow, as consumer spending is a major portion of the U.S. gross domestic product.
