In the News – Credit Loosening As Home Prices Rise

In the News – Credit Loosening As Home Prices Rise

This winter saw the largest share of conventional mortgages made to borrowers spending more than 45 percent of their monthly income on mortgage payments or other debts since the housing crisis, according to CoreLogic.

With supply and demand out of balance on the housing market, home prices are rising, and economists say that rising debt levels are a common result of such conditions. Government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac have been “experimenting” with ways to make homeownership more affordable, reports, by guaranteeing loans with down payments at 3 percent, backing loans from lenders that have agreed to help pay off a borrower’s student loan debt, and by easing the path for self-employed borrowers to get a mortgage.

Sohani Rao, a software engineer in the San Francisco Bay Area, tried to buy a home for about a year but finally gave up a few months ago. Dozens of prospective buyers would show up for open houses, she said, even for homes in poor condition, resulting in bidding wars that put them out of her price range. Ms. Rao said loosening lending standards would only create more bidders. “Thing are so bad right now,” she said. “By doing this, they might have even made the problem worse.”

Read More

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s