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| Authored by: Wol on Sunday, January 06 2013 @ 03:44 PM EST |
What you ALSO miss is that, BECAUSE OF EASY CREDIT, people who would normally be
able to afford a mortgage had to borrow a lot more than they wanted to, because
prices were so high.
Make money easy to get, and prices will boom. If you only have 9 houses for
every 10 people wanting one, then someone is going to be priced out of the
market. Make borrowing easier, with the INTENT of making it easier for that
tenth person, and all you do is raise the entry-level price.
That certainly is the problem in the UK - prices are driven up by lack of
houses, and all you do by making credit easy is drive prices up. In places where
there are no jobs and no demand it's not difficult to snap up a pretty decent
place for £20K. But usually with poor transport links too...
Cheers,
Wol[ Reply to This | Parent | # ]
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| Authored by: Anonymous on Sunday, January 06 2013 @ 07:28 PM EST |
At the mortgage company i worked at, fixed rate loans were prime plus 7%, on
the day that the mortgage was booked, if
you had excellent credit. (850 FICA was the minimum score)
ARMs were either 2%, or LIBO plus 2%, for good credit.(700 FICA.)
If you had average credit (600-700 FICA), you paid a couple of percentage
points more for the loan, and again, in interest. Less than 600, you were
dinged even more.
So, if you FICA score was, say, 500, your fixed rate mortgage would be around
12%, whilst your ARM would be around 6%. And if you took the fixed rate that
was really an ARM that the firm peddelled, it was 3%.
Which one would choose, if you relied solely on the advice of your friendly
banker? [ Reply to This | Parent | # ]
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