Home Mortgage Loans – Will Lower Rates Help this Market?
Posted on | March 3, 2009 | 2 Comments
The current housing and mortgage market has taken a beating over the last three years. The lending procedures for home mortgage loans could ultimately be the reason for the economic crisis we are currently in. Lenders offering low mortgage rates to anyone over the age of 18 kick started the subprime crisis. From the subprime crisis we worked our way into the credit crisis. The credit crisis lead to the current overall economic crisis we are currently in. Can low rate home mortgage loans really put the economy in a depression like this?
Yes! When individuals have access to $350,000 while only making $40,000 a year, there is definitely going to be a problem. This went on for the majority of the 1990s and the first half of this decade. The housing bubble was created because ANYONE could by a home. If you had any type of job you were likely to be approved for a low rate mortgage. Most of these lower rate mortgages were adjustable, but the borrowers had very little worries as the price of their home was going to double right? Well, no exactly. Now the price of their home has halved and they are still making $40,000 a year with a $350,000 mortgage payment on a house that is worth $160,000. Tough times, huh?
To compound matters, the economy continues to get worse. Each month the unemployment level rises and the stock market declines. The current president seems to being telling Wall Street exactly what it does NOT want to hear. The stock market has halved itself in less than two years and the housing market has STILL yet to hit a bottom. Will things get better? If we lower home mortgage rates to under 4% will this cause a buying spree in the housing market?
Where are people going to get money to buy a home? It is highly likely that many will refinance at lower rates, but who has the income to purchase a new home in this economy? Until the unemployment rate reverses, it is unlikely we will see a bottom in the housing market.
The worst has yet to come. Retailers are closing each and every week. This means less jobs for Americans. Once again, this is going to increase the unemployment rate and hurt the mortgage market. Even if mortgage rates were lowered to 2%, it is not going to help if Americans do not have jobs. When companies start to grow and jobs are created, this is when we will see America dig itself out of this hole. Until then, the overall economy will spiral downward.
The one great thing about this economy is that everything is dirt cheap. This is the best time in the history of the United States to buy anything over $100. Televisions, vehicles, computers, and even homes are at the cheapest prices of our times. If you have been financially smart, reward yourself. You can take a vacation for less than half of what it would have cost three years ago. You deserve it and now is the best time to do it!
- If You Think Mortgage Rates are Low Now, Wait Until You Read This
- Refinance Today? Is It Right For You?
- Buying or Refinancing a Home in 2009? A Must Read!
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March 4th, 2009 @ 4:07 am
[...] original here: Subprime Blogger / Home Mortgage Loans – Will Lower Rates Help … This entry was written by admin, posted on March 3, 2009 at 10:26 pm, filed under Object and [...]
March 4th, 2009 @ 4:37 am
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