I haven’t posted any entries this week about the proposal to “assist” some of the holders of subprime loans, since you can read all about that, elsewhere. I do have an opinion on the subject (of course) and will try to get around to posting about it, this weekend.
As we’re seeing, the US economy is in a tenuous position, right now. Will the subprime lending mess affect the overall economy, taking us into a recession (has it already?)?
So far it seems as though the economy has been able to sustain itself. Geez, if war, $3.00 a gallon gasoline, and a severe credit crunch won’t shake the US consumer, what will???
Two bits of note (?):
Interest on 30-year fixed loans sank to 5.96 percent from 6.10 percent last week, landing at the lowest point seen since September 2005.
Borrowing costs on 15-year fixed products fell to 5.65 percent from 5.73 percent over the week and five-year adjustable-rate mortgages were down to 5.75 percent from 5.86 percent, but one-year ARMs bucked the southward trend by bumping up to 5.46 percent from 5.43 percent.
This is good news for the average consumer. (However, rates did spike today, by as much as a quarter of a point, for various, and somewhat contradicting, reasons. If you’re closing sometime during the next month, I guess this as good a time as any to lock in, right?)
Home equity loans are on the decline, and mortgage industry experts say many home owners will not be using their homes this year as ATMs to finance their holiday purchases.
Consumer spending financed through home equity loans rose every year from 1995 to 2005; and although data is not available for 2006, the trend is believed to have continued last year.
However, banks are said to be pulling back on underwriting this year; and Freddie Mac estimates that only $60 billion in cash was taken out of homes in the third quarter, down 26 percent from the previous three-month period.
Our economy depends upon consumers recklessly spending all of their savings and home equity.
If they back off from that … we’re all in the soup.
Source 30-Year Mortgage Rates Fall to 2-Year Low – Baltimore Sun, by way of Realtor.org
Also: Home Owners Less Likely to Tap Home Equity – By Mike Meyers, Monterey County Herald
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