For what it’s worth (since it’s about the economy)
Posted on October 3rd, 2008 at 9:23 am by Eric PuffMy wife and I bought a house this summer, so I thought I would ask my mortgage guy how things were going for him, whether people were buying or too scared, and if I could get the same loan if I showed up today. This is what he said:
Oddly enough even though the media would have you think differently you still can get a low down payment loan at a pretty good rate. The smaller banks, like mine seem to be doing OK. It just takes a little more thought of how to structure the loans. It is a very scary time because of the unknown, but all in all well.
Does this reflect your area or understanding? I wonder if people are too scared to apply for loans they could probably get. If so, I’m sure this fear is a factor in the election.
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I’ve been saying it for about a week now, the “end of the world” rhetoric that the Congress and Treasury have been using are only being used because we are a month from the election. If “crisis” were happening four months from now, or next year, there would not be the panic and the sky would not be falling, as the Chicken Littles in Congress would have us believe. I also think that the Congress & President are determined to keep the “status quo” they’ve created in this economy. They have never considered that perhaps we should just let the status quo go the way the market wants it to…for the health of all in the long run.
The free market will work, we just need to take a deep breath, think thru what we are doing and make sure that the “solution” is not worse than the problem in the first place.
I think people have just been living far beyond their means for far too long. They have learned this from the government who can’t live within its means either (see “The Bazillion Dollar Bailout”). This borrow and spend lifestyle is unsustainable in the long run, and it has been running a long time. I think the “free market” just caught up and a correction is in order.
It was hard to swallow the $700 billion bailout on Monday, now that they have “sweetened” it with an additional $150 billion aimed at a few politicians who can be swayed by pork (the other white meat) I can’t even chew.
Right now, the credit is hitting business lending much more than it is housing, but it won’t be long before it hits housing.
Business lending has basically stopped. My company, a top 3 global consulting firm, was supposed to be bought out from one of the largest and most well respected private equity firms. The deal was put on hold because they couldn’t gather the capital. My dad’s company was about to sell off a piece of their business. They were about the close to deal and then the bank pulled out and wouldn’t loan the other firm the money. I can give you a ton of examples.
Look at the economic data that came out yesterday. Auto dealers have reported a 20 - 30% drop in sales. Manufacturing orders were way down. Construction companies aren’t getting new jobs because their customers can’t get the funding for new projects.
It hasn’t hit the every day person yet, but it won’t be long before it does.
Good distinction between business lending and personal-and the state of our businesses is a big deal-BUT I believe there will always be loans for people with good credit to buy reasonable homes.