Analysis and discussion of issues that impact business

So is this the glass half full, or half empty?

U.S. mortgage applications rose sharply last week, fueled by a surge in home refinancing loans as interest rates sunk to their lowest levels in more than a year, an industry trade group said Wednesday.

I'm not trying to be too much of a trouble maker, but there are some important questions to ask.

The wording of this article makes me wonder.

...U.S. mortgage applications rose sharply last week, fueled by a surge in home refinancing loans as interest rates sunk to their lowest levels in more than a year...

So, according to the Mortgage Bankers Association more people are refinancing their homes, but does that mean that consumer debt is shrinking? Probably not.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 5.98 percent, down 0.15 percentage point from the previous week, the lowest since the week ended Oct. 7, 2005, when it stood at the same level.

Hey, paying less money to borrow money is a good thing. It's the borrowing money thing that still leaves me a bit nervous.

Fueling the rise last week was a 13.7 percent rise in the MBA's seasonally adjusted index of refinancing applications...

Refi's just pushed past the 50% mark of total mortgage applications, higher than it's been in 2 and a half years.

Fixed 15-year mortgage rates averaged 5.66 percent, down from 5.86 percent, its lowest since January. Rates on one-year adjustable-rate mortgages (ARMs) decreased to 5.79 percent from 5.87 percent, its lowest since March. 

Now for the responsible borrower, that's good news. I have a family member who used the equity in their home to finance a new business. 3 years later, the business is doing great. They now took the newly freed up equity and are now financing a new business.

Smart debt management is a powerful tool. Using credit to accumulate things is not.