Low rates no guarantee of activity

Today's New York Times reports that even after the Fed's announcement last week that interest rates will remain unchanged at their near historic lows, the amount of borrowing done by consumers remains down. Part of this has to do with a lack of confidence that the economy will improve but other factors include already heavy debt loads being carried by many individuals. Plus, the knowledge that interest rates will remain low for two years suppresses any sense of urgency that people may have to invest sooner rather than later out of fear that the rates may rise.

Our own statistics here corroborate the anemic state of borrowing. In July, the number of mortgages recorded (883) was down 20% from July of 2010 (1105). In the first two weeks of August, the drop off was even greater, going from 480 in August 2010 to 352 in August 2011, a drop of 26%.