There are signs that banks are beginning to approve more loans to consumers for the first time since the credit crunch began. Important factors include big banks posting good profits, and job-loss statistics decreasing, and a stock market at its highest point since 2008.
So far, most loans have been to businesses with consumer loans lagging behind due to concerns about unemployment, and foreclosures. Consumers who have been paying down debt and saving more are beginning to spend more also fueling the optimism.
With the stock market and bank profits up, banks are slowly beginning to focus on making new loans rather than dealing only with their bad loans. That is good news for borrowers, at least those with good credit histories. The bullish outlook is good news for auto dealers, retailers and home builders. In the third quarter of 2010, banks made more than 36 million consumer loans mostly on credit cards, consumer-finance, school loans and home equity lines.
The totals reported exclude new mortgage loans but does include refinances. Some smaller banks have raised the total that can be financed to 90% from 80%. Some borrowers are using the loans to pay for home improvements, to get rid of mortgage insurance or to escape higher interest rates of jumbo loans. Some are even using home equity lines to buy new homes.
Any good news is very good news.
Learn more about the Western North Carolina Mountain Lake Region around Lake Lure at : http://www.DiscoverLakeLure.com
The US Government has long been involved in helping to assure a flow of funds for the US housing market. Support of the Savings & Loans served the purpose until 1989 when deregulation of interest rate controls forced the S&Ls to compete in a real market economy. The result was a bailout that cost taxpayers 150 billion dollars.
Lesson unlearned, the government moved on to the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, as a tool to buy and hold mortgages. Unable to resist an opportunity for tweaking social policy, by 1992 Congress was using Fannie and Freddie for a new mission, affordable housing. The mandate to make it possible for more people to buy a home lead to lowering standards: minimum income required, credit worthiness, and minimum down payment. The sub-prime loan was born. The increased demand also helped to push up home prices and feed the real estate bubble.
By 2008, half of 27 million US mortgages were high-risk loans which had often been made with little down payment by borrowers. As housing prices started to drop, borrowers with little personal financial investment in their properties began to default. The collapse this time took the entire US economy with it, each side adding more fuel to the meltown. The final cost of bailout is estimated at between 220 and 360 BILLION dollars.
This government intervention has at least made it possible for more Americans to own their own home? It turns out that the US ranks #17 among developed countries in home ownership rate. In most European countries, bank mortgage portfolios are supported by covered bonds that investors consider high-quality financial instruments. With banks guaranteeing any potential shortfall, they have a vested interest in making sure borrowers are credit worthy.
The US housing market is huge and banks here cannot supply all necessary mortgage credit. But Fannie Mae and Freddie Mac and their lax standards have not solved the problem. The future is likely to be one with much less taxpayer subsidized support for mortgages. Other viable financial instruments such as those found in the securization market, the backbone of credit card and auto loan markets, will be have to fill in the gap. With more real market financing of mortgages, borrowers will have to be credit-worthy to guarantee that investors buy in. The FHA will and should continue to finance low-income borrowers but reform is needed to make sure this agency does not grow into another Freddie/Fannie type vehicle bloated with risky loans that taxpayers will be asked to bail out a few years from now.
The challenge will be to make sure homeownership remains an option for as many Americans as possible.
To learn more about Western North Carolina, visit http://www.DiscoverLakeLure.com
B
est Places To Retire...These lists are SO much fun to read!!
I'm one of the lucky ones. My market is the Western North Carolina Asheville Metro area (which includes Lake Lure) and it regularly makes these lists.
Sometimes I read the "Best" and wonder WHAT was the writer thinking? Honolulu? I won't argue it may be paradise on earth but for most of us, reality checks include what we can afford. Better yet, Portugal as a great place to retire. Yes, the sun is shining and the cost of living affordable but there is another little - perhaps important - detail... Portuguese may be a useful skill to acquire before making that move?
Weather is high on the best places to live criteria list. I can go along with that one without critique. As I write, I see snow outside. It's lovely but its beauty is enhanced by my knowledge that it will soon be gone. I love my Western North Carolina four seasons climate... a little bit of this, a little bit of that. Lake Lure in the fall is glorious! DiscoverLakeLure.
Bookstores and movie theaters? I wonder... between Kindle and Netflix, should these be as high on the priority list as most "best" lists put them? The times, they-are-a changing... An internet connection? Well, count that as a "must have" for linked-in baby boomers!
Taxes. Now, there's a direct hit! But let's get real: There's no such thing as tax-free living. It's income tax or property tax or a combo of both that help all states pay their bills. You have to figure out which tax hit is likely to have the bigger impact on YOU. Or learn to love bumpy roads with potholes.
Medical services. Not pleasant to think about but let's face it, as we accumulate miles, we do need more regular maintenance to keep running smoothly and an occasional major overhaul.
The Western North Carolina Asheville Metro area (including Lake Lure) often makes these lists and that is not surprising. Weather, nature, taxes, and value- we have it all!
The "best places" and even the "places to avoid" lists are great food for thought. They're a chance to stop and think about what's most important to each of us. But let's not swallow them whole without a bit of chewing.
Learn more about Western North Carolina at http://www.DiscoverLakeLure.com
If you need a Lake Lure area real estate expert, visit my website at http://www.DiscoverLakeLure.com. Search Western NC real estate and learn more about Lake Lure, Chimney Rock, Gerton & Bat Cave.
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