The idiocy of the sell-side

No, not that sell-side. Think real estate. Think realtors, home builders, the people who have to make a sale to justify their very existence — the same groups now pushing Congress and Treasury to consider installing teaser mortgage rates in an effort to entice borrowers back into housing. Via the Sarasota Herald-Tribune, we’re not making this up:

Large builders like Toll Brothers and real estate companies like Realogy Inc., the owner of thousands of Coldwell Banker and Century 21 offices, and now the National Association of Realtors, want the federal government to cut mortgage rates to 4.5 percent or less — for home home sales up to $1 million. “Our research indicates that an interest rate deduction of just one percentage point could result in as many as 840,000 additional home sales, which would further reduce the inventory of homes by as much as 20 percent,” said Lawrence Yun, the Realtor association’s top economist, at the group’s annual conference in Orlando on Thursday. … Coldwell Banker’s parent, Realogy, approached the Treasury Department about two weeks ago, suggesting the government rate buy-downs. Toll Brothers, one of the nation’s largest builders, chimed in this week with its own pitch for government-sponsored teaser rates on new homes. “There are millions of credit-worthy people ready to jump back into the housing market, but they need to be motivated,” said Realogy president Richard A. Smith in statement. [emphasis added]

I’m dumbfounded. Teaser rates? Isn’t that how we largely got into this mess, by enticing borrowers who couldn’t afford a market-rate mortgage to pay a teaser rate? We’re going to spend billions of our dollars fixing this mess. Here’s hoping that we don’t listen to the groups that got us into this foxhole when trying to figure out how to get out of it. Is that too much to ask?

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