More hopeful signs of a recovery in the housing market could be seen this week as Monday’s report on existing home sales figures showed a surprise jump of 5% for February and new home sales also surprised with a jump of 5%. For Bay County the increase for existing home sales was 29%. Statewide the increase in condo sales was also up 15%. This follows a 21% jump in mortgage applications last week and a surprise increase in housing starts and permits last week. Also, the Mortgage Bankers of America reported Thursday that mortgage rates stood at their lowest levels in fifty two years.

On Monday, the Treasury Department announced its long-awaited plan to purchase toxic debt off of banks’ books, including mortgage backed securities. Wall Street cheered the plan with the biggest one day gain in the Dow since November. The real test will be how well private equity participates with the government in buying the bad debt. Right now we are seeing a delicate balancing act of the Federal government attempting to push mortgage rates lower while issuing new debt to buy bad debt which tends to drive rates higher. So far they are doing a remarkable job. Hopefully, this will all translate into borrowers being more willing to step into the housing market and more banks willing to lend to them.