To the extent that there are those that have over extended the equity of their residences I would agree that their options are limited.

However, the housing report published this week indicated an increase in sales resulting from the reduction in prices. There is a large segment of the market that does not find themselves in that circumstance. They may have the option to refi to avoid the large interest rate increases of adjustable rate mortgages. I am still seeing a large number of refies in this area.

The Fed is concerned that problems with the housing market may bleed over into other areas of the economy. Too bad they did not think of that before they did 17 interest rate hikes. I also remember the 80's when it was not unusual for 12% to 14% mortgages, and the prime rate was through the roof.