President Obama’s proposal to expand access to mortgage refinancing has reignited a debate about the appropriate role for government in supporting the housing market. Some economists argue that the best way to spur the recovery is to stop intervening, let matters run their course, and allow home prices to normalize naturally.

The new initiative, briefly mentioned by the president in his jobs speech last week, seeks to help homeowners to refinance their mortgages at lower interest rates with hopes to stimulate consumer spending and boost economic growth.

Anthony Sanders, professor of real estate finance at George Mason University, says it’s a mere extension of The Home Affordable Refinance Program , which has helped only a small number of homeowners. In his view, the initiative is unlikely to have any significant stimulative effect on the economy.

“At best, that plan will generate $90 billion in additional borrower income. But that is only one tenth of one percent of personal consumption expenditures,” Sanders told CNBC.

"Households will appreciate the additional $150-$300 per month, but those will be taken from pension funds and others who invested in Agency (Fannie, Freddie, FHA) mortgage-backed securities," adds Sanders.

More Top Stories

Perfect Storm Sparks Massive Nikkei Sell-Off

'Tectonic Plate Shift' for Markets on Fed Fears

China's Economic Outlook Just Keeps Getting Worse

Volatile Trading Day Keeps Focus on Fed, Jobs Data

Forget Fed Hawks, Focus on Bernanke: Alan Blinder

More Top Stories