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The Key Idea In The Housing Program President Obama's Talking Up Today

 A for sale sign is posted in front of a house in Glendale, California.

Here's the key idea in the new housing program President Obama is talking up today:

A lot of people who owe way more on their mortgage than their home is worth — and who are current on their mortgage payments — will now be able to refinance at a lower interest rate. A lower interest rate, of course, means lower monthly payments, and more money to spend on other things.

There's been a program in place for a while now that's supposed to help people refinance. But it's helped far fewer people than originally projected. So the idea is that loosening up the rules in the program will let more people take advantage of the program. (The full details are in this PDF.)

It makes sense that the president is talking about the program in Nevada — more than half of all homeowners in the state are underwater, more than in any other state. (Nevada is also a swing state, by the way.)

The new program may indeed help some people refinance into cheaper mortgages.

But for the nation's households overall, monthly debt payments as a percentage of disposable income have already fallen sharply. That's not because overall household debt is low (it isn't) but because low interest rates have already led to lower monthly payments for millions of households.

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debt payments to income
/ St. Louis Fed