For those not familiar with what I am talking about, as of October 1, 2008 FHA backed loans are no longer eligible for seller financing concessions.  Meaning, the seller of a property is no longer able to help the buyer with their down payment and/or closing costs.  This could equal up to 6% of the cost of the property.  I can tell you from experience, buyers were out in droves trying to take advantage of this opportunity before it was too late.  There were some who did not even need it but considered it an instant "rebate" on buying.  Couple that with sellers anxious to sell, many complied (and this is not a platform for the argument of inflated appraisals either).

Now I do not claim to be any financial expert and perhaps my idea is in vain, but what if it were possible for the mortgage industry (banks) where able to cooperate with the housing market by offering from now until say December 31st, 2008 locked in fixed rates from 4.5-5.25% for those that qualify (income verification and reasonable assests required) to only homebuyers.  I believe this would create an environment that would encourage those that can buy to get off the fence knowing the rates will be for a limited time.  By doing so, our current housing inventory can potentially be absorbed and thus, prices stabilize. 

Now I do think there needs to be restrictions so that the market isn't flooded with re-fis, which special rates could be offer to those in "potential" high risk similar to that of the incentive for those facing foreclosure with risky arms.  By loosening the financial "hold" of the cost of housing, confidence will increase and people will be less scared to spend.  This may even be more beneficial after the elections which is when I think many might regain their hope.  This also will prevent those from dumping their overpaid properties back into the market since price will still be king and for those selling under the 5 year bench mark but most assuredly take a loss.

When the basic law of supply and demand is back in balance, we will witness stable housing prices, moderate inventory, and consumer spending less restrictive.  Hence, jobs will be created, investments will go up and our economic equilibrium is restored. 

Any thoughts?