Tightening Credit?
Readers suggested a topic on current credit trends. “Tightening Credit? Is anyone seeing/feeling this in your area. Some of our local banks are still pushing zero down 100% home loans with a good credit score. Chase is still pushing 0% C.Cards on transfers up to 15 months… 6.9% fixed.Just had that offer last week. COFED Bank of Colorado is sending out a big push for first time home buyers.”
From a lender. “Well, there are loan-peddlers, and then there are lenders. I could shut down my lending window for a number of years, so long as my clientele don’t all simultaneously decide to pay off the principal. Loan-peddling, an occupation even more unproductive than mine, is dying a well-deserved death.”
One had this, “We cut up the last credit card 2.5 years ago, and if I want a TV I have to save up to purchase it. Of course I won’t roll in there and spend 5K on a TV, because when you pay in cash you feel the ‘pain of purchase,’ and suddenly you start thinking things like ‘hmm, I can buy a 1k TV, take a 1K trip, throw 2k in savings for the kids education, and buy new laptops for the whole family for 1K.’”
“Nobody would make those stupid purchases if they made them with cash.”
“The really crazy thing is how would we measure the economy if we didn’t measure it based on ‘public sentiment,’ which is really just how willing people are to go into slavery to Visa for poorly thought out purchases.”
Another has this strategy, “We married with simple, thin wedding bands. (Eloped to boot!) When meeting my add-on family, my SILs asked, ‘Where’s the rock’?”
“I just smiled. Hubby and I were saving for the diamond, and we decided used furniture was a better fit. Yes, we saved for a rock, it’s modest and I actually prefer other jemstones to the ice.”
“We still save and often change our minds on any given designated purchase(s). Saving is addictive. I’ve been able to keep our principle and earn a modest return.”
Another noted, “Was in BofA today. 30 yr. fxd @ 6%. home equity @4.75%. New gimmick started today; seems when an indivdual makes a purchase with a debit card the bank rounds the amount up to the nearest dollar, transfers the difference from checking into savings AND matches the deposits for one year.”
“I asked the teller if the bank is now encouraging saving. He just chuckled. This bank is actually encouraging the use of debit cards.”
One from Georgia. “I saw some income demographics for one of the suburban Atlanta markets that has seen a lot of new home building during the bubble. Most of these new houses are in the $600K range, but quite a few are over $1M. The median household income for this area is $78K.”
“Guess how many people had a household income of $200K or more that could actually afford (using pre bubble 3X income qualifying) that $600K house ? ONE. That’s right, ONE family out of almost 8000 in a 3 mile radius can really afford that new house they bought.”
From Reuters. “Office of Federal Housing Enterprise Oversight director James Lockhart said that government-sponsored enterprises Fannie Mae and Freddie Mac were taking steps that should help keep mortgage rates lower. Regulators eased capital requirements for the two biggest U.S. mortgage finance sources so they can provide more funds for stressed mortgage markets.”
“In response to questions, Lockhart said he supported the idea of consolidating the regulation of Wall Street investment banks and other financial market participants that have come under criticism as credit markets have come near seizing up.”
“‘I think that’s a good idea,’ he said, adding Fannie Mae and Freddie Mac need a strong regulator as they keep growing.”
“One reason they need to be strongly regulated is to prevent the possibility that, should they get in trouble, they could cause problems for the whole financial system.”
“‘Systemic risk is a big issue with these two companies. When you have 76 percent market share in just two companies, obviously they are the system,’ Lockhart said, calling that ‘a key reason’ for legislative action to tighten regulation.”
From MortgageOrb. “The Office of Federal Housing Enterprise Oversight (OFHEO) has transmitted to the Federal Register a final Examination Guidance - Conforming Loan Limit Calculations.”
“The final guidance addresses the handling of decreases in the house price data used to set the conforming loan limit as well as procedural matters relating to calculation of the limit that determines the size of mortgages eligible for purchase by Fannie Mae and Freddie Mac, OFHEO explains.”
“Based on comments received in two public comment periods, OFHEO is issuing a final guidance that provides that the conforming loan limit would not decrease from its current level of $417,000 in 2009 and subsequent years. However, OFHEO adds, the conforming loan limit will not increase until cumulative increases in house prices exceed cumulative decreases since the $417,000 limit was first reached.”
“Based on comments received in two public comment periods, OFHEO is issuing a final guidance that provides that the conforming loan limit would not decrease from its current level of $417,000 in 2009 and subsequent years. However, OFHEO adds, the conforming loan limit will not increase until cumulative increases in house prices exceed cumulative decreases since the $417,000 limit was first reached.”
Wow… OFHEO just basically SHOUTED that this will be a long term housing bear market.
chuckle… Great find Ben.
Got Popcorn?
Neil
1 - public comment period…hahahahahaha..that’s funny, as though the public has any input.. the public’s wishes aren’t met the polls, let alone a public comment period.
2 - sincere question…can someone explain the “the conforming loan limit will not increase until cumulative increases in house prices exceed cumulative decreases since the $417,000 limit was first reached” part of the passage? I’d be interested in an example of the mathematics on it.
I’m not sure what you mean by the public’s wishes not being met by polls, but public comments are a serious business, at least they are in my agency (not OFHEO). As a matter of fact, it wasn’t related to regulations, but I spent most of this week (really quite a bit of the last few months) reviewing, dicussing and implementing changes based on industry comments.
There are also a lot of other reasons why OFHEO might do this assuming their normal procedures would be to adjust the conforming loan limit up and down as indicated by their statistical models. Here a few completely wild guesses:
1) Since Congress has overruled the normal use of the conforming loan limit by allowing Fannie and Freddie to buy larger loans, wasting time on adjusting the conforming loan limit is just that, a waste of time.
2) If they do adjust the limit down, Congress will pass a law to prevent them from doing it and probably cause all sorts of other mischief besides. Avoiding a situtation that will inspire Congress to do something that will permanently muck up a system that worked OK a decade ago is worth a slight adjustment in normal operations procedures (once their lawyers assured them that doing it wasn’t illegal).
3) They are so busy trying to prevent Fannie and Freddie from collapsing and real estate prices are so nebulous right now (fraud, not enough transactions to set prices properly) that they just don’t have the time to do it properly and any adjustments they made would not be reliable. Better to concentrate on the work they can do and leave the rest alone since they aren’t going to be allowed to hire any staff to take care of the extra work.
That is just off the top of my head.
Here is a link to the OFHEO website page about regulations. There are links to pages of public comments towards the bottom of the page. Enjoy.
http://www.ofheo.gov/Regulations.aspx?Nav=118#comments
As a matter of fact, here is a direct link to the comments on the issue at hand, I think:
http://www.ofheo.gov/Regulations.aspx?Nav=311
I only checked the 4 comments from private citizens, but 2 of the 4 recommended upping the limit to half a million dollars.
I have close to perfect credit (I assume, never checked it, but maybe paid 4? bills late in my life..). Have savings in the bank.
Applied for a credit card the other day. Got rejected! LOL. They had 4 distinct bullet points why I couldn’t have one. Uhhh guys, if I can’t get a credit card from you, who can?
This credit crunch IS real. I can prove it…
-My 2 Pesos
That may be evidence of a credit crunch. It also might be a warning that you should check to see whether you are the victim of identity theft. Obviously I don’t know what information they included in those bullet points, and maybe that’s enough for you to feel secure that it is not a result of identity theft but, instead, sign of the credit crunch. But, just thought I’d pass that alternative possibility along.
HEY everyone, I am back from my travels overseas! And, things are unwinding pretty much as we thought. Glad to be back to watch the show.
IAT
sorry to pry, but I’m curious, what were the four points (reasons)?
You should check your credit reports - you may well have an unpaid debt/collection that you’re not even aware of. This happened to me last year, when a medical center I had visited while on a consulting assignment issued a follow-up bill that I never received. It was only for $60 or so, but since they couldn’t collect it, they put a collection notice on my credit report, which lowered my FICO score from 820 to 680 with the stroke of a pen. Found out about it when I went to look for a new apartment. Luckily it was easily resolved with a phone call and a check, and my score was quickly restored to its proper level.
Point is, that can happen to anyone, and may be what happened in your case.
Thanks for the pointers guys. I dont’ remember the points they listed but, I remember they were ridiculous “Not enough X, Y,Z..” I’ll look to see if I have an “unpaid bill.” LOL. That would be a dream come true. A friend owns his own law firm (one man show) & he only does fraudulent debt. Mainly CC companies. If I find someone doing something like that to my score…man…sick ‘em!
A bill was passed a couple of years ago allowing anyone to get their credit report for free (one per year from all 3 agencies). Site is: Annualcreditreport.com
Your identity might be stolen. Request a credit report. For 40 USD, Equifax has a product that gives you your report from all three of the credit reporting agencies: Equifax, Transunion, Experian.
Here’s an FTC link on getting a free credit report:
http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre34.shtm
Getting a report from all three ratings agencies I think is a thorough approach.
Amazing. You’d think the easy credit pushers would be out of business already.
The system will always require new slaves to replace the ones they destroyed.
Got Slavery?
Bennie and Bushie have their back. Lowering Fannie reserve requirements, cutting rates, and taking junk collateral for loans is all credit expansion.
Every time I see this baseless speculation, I only have to refer you to the proof I post every day that exactly the opposite is occurring. Debt is evaporating quicker than Bear Stearns. I understand it’s up to 2.5 trillion just in the US. Keep telling yourself that stuff though. Gotta have the other side to profit from.
What is baseless speculation? All the things I point out have happened. I didn’t say rates are falling.
I have no idea what Ben is talking about either. Everything you mention is a known fact today.
Everything you mention is a known fact today.
Posting that it’s a “known fact” doesn’t make it so. Ben is correct.
Ben Said:
Gilders Green, Stamford Hill (?), and in ManchesterEvery time I see this baseless speculation, I only have to refer you to the proof I post every day that exactly the opposite is occurring. Debt is evaporating quicker than Bear Stearns. I understand it’s up to 2.5 trillion just in the US. Keep telling yourself that stuff though. Gotta have the other side to profit from.
Ben, I agree with you, but I don’t know that I have seen any concise explanations of this. Do you have a link to any good articles or graphs? I am particularly curious for a source for the 2.5 trillion number.
Come to think of it, this might be worth it’s stand-alone topic. This is pretty important stuff, with a deep impact, and not readily discussed by the MSM.
Deflation is destruction of debt and contraction of credit. Forty years of credit expansion is what got us here, and the ability of debtors to service the debt has reached a maximum potential even if interest rates were to be reduced to zero. Debt implosion…
What the man said!
Then what? Checkmate? Exactly what does happen if everyone defaults on their debts? Who does not get paid since there is far more debt in existance than actual earned money…
“what does happen if everyone defaults on their debts?”
For the time being, fearing a total collapse of our debt-based monetary system:
Ben Bernanke gives a speech to community bankers and tells them that institutions holding mortgage debt would be better off granting forgiveness (e.g. 25% write-offs) on mortgage debts rather than foreclosing and realizing even more write-offs (e.g. 50% write-offs).
http://www.bloomberg.com/apps/news?pid=20601103&sid=aLPiHQ.ASN48&refer=us
If that doesn’t work, and “everyone defaults on their debts”, this would presumably include default (pun intended) on US Treasury debt by the US Government, at which time the global economy collapses and the *real* fun begins, i.e. the fight (war) over who will control the best assets and scarce resources such as energy, food and water begins.
“Who does not get paid since there is far more debt in existence that actual earned money …”
At the end of all this chaos the debt backed by thin-air collaterial will have disappeared into thin air and so will the money associated with it.
The money associated with solid debt (debt backed by solid collateral) will remain.
I just read about the President’s plan to use Public Funds to bail out homeowners that borrowed more than they can afford.
After all of the obvious economic structural shifting, it is apparent to me that the Federal Government is being led, by the political tradewinds, to a financial slaughter, just as livestock is led to the slaughter house. How can we be so economically ignorant to believe that the continued flooding of the money supply and suppression of interest rates will not have disastrous implications for the dollar, and subsequently, the American economny? Do we really believe that we are invincible, and that we can “manage” the economy without dire, unpredictable consequences? Every lesson in political-economics, in history, has demonstrated that governments rarely get it right, when trying to buy their way out of the necessary economic pain that comes from the excesses common to the upside of the business cycle. Sure, we can mitigate, to some degree, the effects of the business cycle, but our current obsession with government intervention in the markets portends dire, unforseen consequences.
We must let the chips fall where they may, so that we may absorb the adjustments as quickly as possible, and then learn from the obvious mistakes of our generation. Then we can more quickly get back to the business of acting in our economic self-interest with prudence, saving more than we spend; scrutinizing each purchase to make sure we are maximizing our value and utility; and then the economy will heal itself, as the collective result of better individual decisions made by the rank and file.
It is time for the quiet majority to let our ‘political finger-to-the-winders’ know that enough is really enough! Write the President; write our Senators; write our Congressmen, and let them know that we are rushing head-long into financial catastrophe by printing money to throw into a black-hole of individual and public excess that will never be filled.
Rant off
sounds like we need a “public comment period”….
write And Call. Otherwise, they ‘don’t hear us’.
Once the gov’t lowers FB’ers debt, take away their ability to deduct the mortgage interest. This keeps them in their homes, but makes them pay it back through income taxes.
Ben,
I don’t think the country really understands the problem. When you step back, it really is pretty simple. We peddled loans to a bunch of people and business that couldn’t really service the debt over any length of time. It totalled Trillions of dollars. Those people went out and spent the money and the economy prospered.
Based on that properity, individuals, businesses, and municipalities borrowed even more money driving further prosperity. Prosperity drove spending driving more prosperity creating and feeding upon itself.
As long as money was being lent, perceived prosperity continued…….until the debt burden got so high that the system could not sustain servicing it. It got so bad that people were borrowing money to service debt(helocs to pay off credit cards and the reverse).
We now have trillions and trillions of all kinds of debt that can’t be serviced. Individual debt, Corporate debt, and Municipal debt. As banks contract credit, even more debt will default and the economy will contract further…..creating a negative feedback loop then turning into positive negative feedback loop (taking us below where we started).
Until we figure out a way to increase our income to service our debt or decrease our debt to our current income levels, things will likely get worse. Unfortuately, everday that passes are debt is going up and our income is going down.
How do we solve an insolvent situation when debt is going up and income is going down????
Ben, if you can figure this one out……I owe you BIG time.
You write off the debt and move on. That’s the smart way.
The dumb way is to avoid facing this reality, as Japan tried to do, with dismal results for its economy.
Well if we did not have to worry about oil imports we could just inflate this away but its not 1960 and we depend on a lot of imports/globalization so we can’t ignite wage inflation. Since attempts to gimmick our internal economy results in a falling dollar and rising costs for imports. Causing price inflation with no wage inflation. So we have the situation we are at right now price inflation for oil/imports and consumer goods/wage deflation.
Add housing price deflation.
In the big picture the cost of housing is not all that important so deflation in expensive consumer items i.e. houses, cars etc is really a small part of the overall situation which is the destruction of the middle class. Suburbia is dying because we are out of suburbanites.
This is why my attitude is it does not matter when I can afford a house it matters when someone else can afford to buy it.
The absolute number of these other people ‘your fellow middle class’ is dropping rapidly so a most of the infrastructure to support them is actually worthless see Detroit.
In my opinion a lot of the people that post on this board are going to be FB’s of the future because they don’t realize that this time around there is no bottom at least not in our lifetimes.
There is a bottom; this bottom is near the baseline of fundamental needs.
When you subtract the bling from the economy what you have left are the essential needs of people. This is where equilibrium will occur (assuming conditions ever deterioriate to such a point).
But we are a long way from there, IMO.
I don’t want to let this unbridled pessimism go unchallenged.
There is no bottom in our lifetimes provided you assume that the lifestyle you have is the only lifestyle that can ever be.
Thankfully, this is nonsense because economies have feedback loops, and given sufficient @ss-kicking, everyone changes.
Hence, you are wrong.
Just to ensure that this isn’t just some feelgood shee-yat, I actually conducted an experiment. I cut expenses to the bone for three months, quite literally to the bone. Mind you, I have ABSOLUTELY no need to do so.
That experiment is coming to all the FB’s. They will get an education, and the world will not stop spinning.
“essential needs of people”
Food, water, energy, shelter. 6+ billion people on the planet. Something’s gonna give sooner than later, maybe faster than you think.
The government seems to think they have the answer. Bail out the gangsters on Wall Street, print money like it is going out of style, and let inflation take care of the problem. What it means is everyone pays for the crimes of a few, and those few get away with robbery.
All part of the process of turning the USA into a 3rd world country. On so many levels, it already is.
I support any plan that throws these assholes in jail. Start at the top and work your way down from there. Water boarding for all. It isn’t torture, after all.
One from Georgia. “I saw some income demographics for one of the suburban Atlanta markets that has seen a lot of new home building during the bubble. Most of these new houses are in the $600K range, but quite a few are over $1M. The median household income for this area is $78K.”
“Guess how many people had a household income of $200K or more that could actually afford (using pre bubble 3X income qualifying) that $600K house ? ONE. That’s right, ONE family out of almost 8000 in a 3 mile radius can really afford that new house they bought.”
I agree…so many of those million dollar communities are just sitting there..right now we have one out in the city of Alpharetta..that has the most expensive foreclosure at 1.3 Million called the Manor Golf and Country….the locals call it “the Dead Zone”..on account that 60% of the community is empty..won’t be too long before the builders in there start claiming BK and dumping…
Problem is that alot of these communities were built with the EXPECTATION of load of money coming in from Fl, CA and NY, NJ,CT
Just a personal anecdote from a couple of weeks ago…
I have a number of credit cards, and have balances on quite a few of them (okay, I’ve had my knocks and am not a wealthy person). I frequently use those balance transfer checks to do what else? — to pay off balances on other credit cards.
Well, I have two credit card accounts with Bank of America. The one account was resetting to a much higher rate (like, from 1.9% to 18%) so I used another bank’s transfer balance check to wipe out that debt (I don’t pay anything north of 6% if I can help it). As soon as I did that, I got two notices from B of A. The first letter told me that because of an internal review, they were REDUCING my card limit on the account I’d just paid off, from $15,000 to $500. Three days later, I got another letter from B of A, saying that they were reducing my credit limit on the other account from $10,000 to $2,900 (I still have a $2,700 balance on that account).
Needless to say, I was shocked. In all these years, I’ve never had anyone REDUCE a credit limit on me. Usually, they are upping the limits, almost without reason.
I’m not playing the victim here. Because it’s really no skin off of my nose. I’m not in trouble, but I’m thinking to myself that if this happens to a lot of other people, this would be a big problem. Has anyone else heard of this type of thing going on? Is this just Bank of America? Comments?
Just the reverse. We have 800+ fica scores, own
free and clear all our properties, and have money
in the bank. AEX just mailed us a notice that
our limit has been raised almost double. We use
our cards for everything, the monthly itemized
bill is great for book-keeping.
Same for us. Some medical work in our family put the CC over the limit, which freezes any more charges. (It was a surprise, I’m normally more than 2x away from the limit. But we essentially self-insure for any medical other than catastrophe, so that was a bad month.)
After it was paid (we autopay in full every month) Citi upped the card limit. Nice guys.
As an early poster mentioned, double check those Fico scores and all your credit -equifax etc, someone may have hijinxed you identity or someone slipped in some incorrect info.
Ya never know.
Last time I checked, has to follow up for 6 mos to correct an erroneous entry. Took 6 mos+. They just don’t listen.
Bingo!
Also, last month, and an acquaintance of mines’ small business loan just got called in by the bank. LOL….10 year+ relationship $3MM in borrowing. Bank rolled in, said some junk about violating covenants (whatever!), and now wants 100% payment, like tomorrow. They clearly lost their butt on subprime & are scouring for money.
And yes, this IS a major bank.
Wild times…
Sounds like BofA is doing adequate customer relationship monitoring. You think they want to lend you money at 1.9%?
I have some money with . . . BofA . . . now at 2.9% for the rest of the year, but I consider this money subsidized by the sad people who either don’t understand how the promo balance game works or who lack the resources to ping-pong card usage to other cards while carrying a promo balance.
ie. the entire game is a racket and should BofA close it down, no skin off my nose.
BOFA Just raised mine another 1000, but I have heard the banks are looking for hints of trouble, presumably based on your total debt, credit score etc and are indeed lowering many credit limits. If you have cards lowering to the subprime level you may have the early symptoms of identity theft. Keep in mind that if a person uses your SSN and their name, the credit agency is not permitted to disclose the information to you under right to privacy laws, so it is possible your SSN is being used under another name.
I continue to get credit cards offers in the mail and toss them without opening them. Perhaps BOA has figured out what you’re doing. They give those big credit lines and high rates and expect to make money on them. They’re obviously losing money on your accounts.
“Has anyone else heard of this type of thing going on? Is this just Bank of America? Comments?”
I recall it being discussed middle of last year when the first reports of banks noticing that people suddenly not paying their houses, preferring to stay current on their card minimum payments. Wondered what would happen to the people using credit card limits as emergency safety cushions rather than savings if their credit limits were cut off.
One article was reported here on HBB about a woman incensed that they would cut her limit after some financial crisis hit their family: That limit was her daughters expensive pre-school “fund”.
Strangely, all the people I discussed it with don’t answer half the calls they get on their phones anymore. Must be slower days for modern bill collectors, what with caller ID, customized ring tones and the like.
You paid a credit card with a credit card, the know it… that smells like trouble, hence they reduce their exposure to you… just close the one you paid off. Pay off they other ASAP, the close it.. the heck with it , I had 3 cards, now 2, will soon have just one with @ 5k on it, will pay that and the have zero cards… they are crooks.
Spoke with an agent in Laguna Beach the other day. According to her, many deals have fallen out of escrow lately — because the buyers can’t get financing.
Maybe credit is tightening because banks are running low on reserves. In the past few months, I’ve gotten two emails and one print mailing from my investment house, reminding me that I haven’t contributed to my Roth IRA this year. (I did contribute, but to another investment house.) This is a very conservative company, and they are begging me for my cash?
Other investment houses are doing this too — asking me to roll over my IRA to them, or stressing how “important it is for me to save for my retirement,” which I translate as: “send us your cash NOW.”
Is anyone else being solicited for investments?
“Is anyone else being solicited for investments?”
Are you kidding? Yes, constantly. Not counting the junk faxes and emails, I get mailings from every one of the fund companies and brokerages that I deal with, not to mention every bank. And every newsletter that I have ever subscribed to is constantly begging for subscriptions with the latest hot deal they have cooked up. Even phone calls from people pushing oil well partnerships, buying junk gold, and heaven knows what else.
Everyone in the money business is trolling for liquidity anywhere they thing they can find it. No real surprise there.
Wells Fargo keeps calling asking if I need/want loans/lines of credit to grow my business, purchase capital equipment, or invest in other businesses or real estate. I’ve been using them for the past 8 years for my business accounts.
On Friday I told my assigned banking solicitor that:
1. No, I didn’t need more operating capital,
2. Despite the Bush economic stimulus plan for business (which they sent info about in a neat PDF capsule) I had no plans to replace or buy new equipment,
3. My receivables were not an issue, but that I was insisting on prepayments more often with new customers as I sense some hard times are on our doorstep,
4. I thought almost all commercial real estate in the area, (Mesa, AZ) would be under pressure for a while and that this wouldn’t be a good time to buy, and,
5. Wells Fargo might just become Wells, Somebody, Somebody if things kept heading toward recession or depression. She asked if I really thought the country could go into a depression. I said yes, the whole world can, and the sun will still come up the next day, but people’s finances will be a LOT different. She had a little laugh and said her grandfather had said some similar things lately and if there was anything I could think of in the way of banking services to give her a call.
I didn’t tell her I’ll probably never call; I threw her card away, if I have an issue the branch is 4 miles away and I can get there; and besides, they call ME every third day anyway.
Ameritrade and Etrade offered cash for new deposits in brokerage accounts. I get emails from Ameritrade all the time with trading videos. I don’t get much from Fidelity. And I get offers for free dinners and retirement planning seminars all the time. I’m too busy with life to grab a free meal most of the time. I haven’t received a cold call in a long time. It’s mostly email and snail mail.
Isn’t this a classic conundrum? Under the premise builders must build and lenders must lend … If banks aggressively tighten credit don’t they at some point effectively stop or at a minimum drastically reduce their life’s blood … lending.
That is why they are going to be laying off so many people. That despite the fact that doing the lending they are still doing using real underwriting standards would require more people (and many more skilled, experienced people) than they have on staff now. Welcome to the downward spiral.
Yeah! but they also want top-dollar for their forclosed junk, this at an auction!
“‘Systemic risk is a big issue with these two companies. When you have 76 percent market share in just two companies, obviously they are the system,’ Lockhart said, calling that ‘a key reason’ for legislative action to tighten regulation.”
There are just two companies making a market in Treasuries. If that seized up, we’d really have systemic risk. They allowed too much financial consolidation IMHO.
What do you mean? There are 26 or 28 primary dealers of Treasuries.
“Another noted, “Was in BofA today. 30 yr. fxd @ 6%. home equity @4.75%.”
This seems so out of kilter to me.
Isn’t the home equity loan secondary to the first mortgage?
I would think that would make it a far riskier loan, particlularly in light of the last year or so happenings; ergo the rate should be higher.
What am I missing here?
Could be that 4.75% is their lowest possible rate for a home equity loan and that the restrictions for getting that rate are that there isn’t any primary loan, or that the two loans together are no more than X% of the fair market value. Any less desirable/more risky circumstances would mean a higher rate.
80% CLTV, plus it’s adjustable.
Our Credit Union is offering a First Time Home Buyer, Teacher Education loan: 100% financing, no PMI, and 6.625% interest.
I didn’t think that was too bad of a deal.
Rates are apparently 5.5% now with 3% pts. PMI is around .875% last time I checked.
0% Ends at a lot of institutions this week.