During the late 20th and early 21st centuries, every sitting U.S. president committed himself to bringing the national debt to half with subsequent attempts at elimination.
This futile objective was ridiculed by former President Barack Obama, who flew billions of dollars to Iran during his term. This was ostensibly to solidify that dangerous regime’s commitment to halting the development of Iranian nuclear bomb capabilities near the end of Obama’s second presidential term.
While the highly publicized attempt at reviewing America’s national debt goes back to post-World War II (1947), the $25 trillion pinnacle that has been reached, and keeps growing, seems of ever-decreasing importance to the current national leadership.
This has been made possible by the fact that the U.S. dollar is now considered the world-leading currency — topping the British pound, which had been in reverse for decades, if not centuries. The main reason for such a detour from critical debt and cost is America’s ability to finance its massive, growing debt as long as the nation can fund the tremendous interest to be paid.
It has been made progressively easier by global interest rates, which have reached near all-time lows in the world’s most viable national revenues. While the British pound used to hold this title, the dollar has replaced it.
The continued 25-trillion-dollar debt lost its consequence as many of the world’s nations continue to look to the United States to protect the European Union and the free world powers that depend on America’s vibrant military strength to ward off potential enemies.
Home Buyers Get Edge Over Mortgage Refinance
Homeowners nationwide are anxiously rushing to refinance existing mortgage rates, but are finding that lenders are favoring their best for new buyers.
As of this writing, the average rate posted on Bankrate commission for a 30-year fixed refinance mortgage was 3.04 percent an offer for purchase; the rates premium for refinances over purchases has widened after the coronavirus pandemic shut down the economy. This pushed interest rates lower across the board.
The spread grew even larger after Fannie Mae and Freddie Mac, which back most U.S. mortgages, leveled a new fee for lenders to shield themselves from potential loss — an extra 0.05 percent on all refinancings of $125,000 and over that close after Dec. 1.
Mortgage lenders are still dealing with a flood of homeowners seeking to refinance, while some banks struggle to keep up with demand. Some are charging higher interest rates to absorb the costs of the new Fannie Mae/Freddie Mac fee.
“Make no mistake, the consumer is going to end up paying this fee,” says Greg McBride, Bankrate’s chief financial analyst. “Diluting the benefit of refinancing and discouraging homeowners from doing so during the worst economic downturn in 90 years doesn’t make sense. As if there aren’t enough fees involved in refinancing, as if the process doesn’t contain enough unwelcome surprises for the borrower, now you have this.”
Almost 20 million homeowners could still save money by refinancing. With a very expansive demand, some mortgage brokers are price-sizing purchases and offering lower rates to grab new business. Most prefer new business over refinancing, but some also make exceptions, hoping to land more customers who provide business loans and such personal loans that require financing.
The advertised rates for purchasers and refis tracked fairly closely through much of 2018, 2019 and 2020. But when the COVID-19 pandemic pushed borrowing costs down late in spring 2020, purchased mortgages fell faster than traditional refis. While banks generally watch their debts closely, this is no longer a factor, as long as the U.S. government is concerned. The debt has already left the $25-trillion mark behind.
Even the Federal Reserve’s long projection, the essence of extreme tightness, is now going well beyond its previous conservatism and lending money as if it were going out of style.
With the inner strength of the nation’s traditional economy projects leading world strength, liquidity is not a problem — for now, as long as the Federal Reserve can maintain the nation’s debt payments.