MARY LOUISE KELLY, HOST:
The pandemic is turning out to be a story of haves and have-nots. Take record-low mortgage rates. They are allowing millions of homeowners this year to refinance and save money and helping boost home sales, but they're not helping people who've lost their jobs and not even helping the economy as much as they usually would. NPR's Chris Arnold reports.
CHRIS ARNOLD, BYLINE: Sheera Talpaz is an assistant professor of literature at Oberlin College in Ohio. She's been teaching remotely stuck indoors, so she figured having a place she could make her own would be good. And now she's buying her first house.
SHEERA TALPAZ: I'm really happy because I like the home, and I think I will just simply enjoy my day-to-day life more living in it.
ARNOLD: And as far as interest rates, the timing was definitely right. The average rate on a 30-year fixed loan dropped below 3% last week for the first time on record. That's going all the way back to 1971.
TALPAZ: The interest rates, once I started looking into things, they did motivate us.
ARNOLD: Talpaz recently lived in California where she says she couldn't afford to buy a home. But now in Oberlin, Ohio, with these rates...
TALPAZ: It'll be lower than I currently pay in rent.
ARNOLD: But there's a definite tale of two cities or tale of two countries in this case happening right now. There are a lot of people out of work who can't afford to buy a house or qualify to refinance, or they're renting and worried about getting evicted. Meanwhile, upwards of 25 million unemployed people at the end of this week will stop getting an extra $600 a week in federal emergency benefits. Those have been a lifeline for many.
KENNETH ROGOFF: We're about to fall off a cliff.
ARNOLD: Ken Rogoff is a Harvard economist who studies financial crises. And he says if Congress doesn't extend or replace those benefits...
ROGOFF: A lot of people are going to have trouble buying food, much less pay their rents and mortgages. There are a lot of problems ahead. I think we need to do something dramatic.
ARNOLD: In a normal recession, the Federal Reserve keeping interest rates so low would be very dramatic, and it would help the economy broadly. When people buy houses, for example, they spend money fixing them up and buy dishwashers and lawn mowers and renovate kitchens. And some of that is happening, but this is not a normal recession. Take the millions of people who are refinancing, people like Andrew McCabe, a manager at a health care IT company. He's got a condo in Arlington, Mass.
ANDREW MCCABE: I'll save about 250 bucks a month.
ARNOLD: Which is great. He could go out to dinner more often and the movies, and that would help local businesses, but he doesn't feel safe doing that. So even before refinancing, money was just piling up in his checking account.
MCCABE: I've easily saved several thousand dollars since I've been home.
ARNOLD: So the extra money from low interest rates is not likely to get lots of people like McCabe to spend more, at least right now. Meanwhile, he's watching more local businesses go under.
MCCABE: In Arlington, restaurants are closing down. Cambridge restaurants are closing down. This morning it was Flat Top Johnny's, and every day we hear about something else local that - you know, places I would go that are now gone.
ARNOLD: So for now, Ken Rogoff says the government needs to keep pumping trillions of dollars into the economy with unemployment assistance and other types of stimulus. But he says it can't do that forever. So he's with a growing chorus of prominent economists and business groups who say, look; stimulus, we need it. Low interest rates, that's good, too. But they also say maybe the single most important thing to help the economy would be much more widespread use of masks across the whole country.
ROGOFF: If you're not containing the virus, you can do all the great monitory policy in the world, all the great fiscal policy, design everything well. If you're not winning the war, you're losing.
ARNOLD: In other words, low interest rates are great, but if we can't crush down the number of new coronavirus cases, the economy can't recover.
Chris Arnold, NPR News.
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