Mortgage Rates – “For three decades, the U.S. middle class enjoyed a rare financial advantage over the wealthy: lower mortgage rates … Now, even that perk is fading away …
Middle Class Suffers In Loan Market
Current Mortgage Rates & Lending Conditions Favor Wealthy Over Middle Class
When we look at today’s real estate market we see some very clear indications that the market is very good for some, but not so wonderful for most. The Middle Class is getting “priced out” of the market in many areas by high prices and high interest rates.
For many years the Middle Class was being encouraged by lenders to become home owners. They could count on paying a lower interest rate on a “normal” loan than someone financing using a “Jumbo” loan. Now that’s no longer possible. A conventional loan and a “Jumbo” are demanding interest rates that are basically the same.
Additionally, the price of housing these days, in many areas, has made the use of “Jumbo” loans a requirement. In many areas there are no homes available below the “Jumbo” loan range. This has simply knocked many potential homeowners right out of the market completely, or at least forced them to look elsewhere if that’s possible for them.
For a detailed explanation of the numbers, the facts on the ground, and how they all work together to create a situation that … like so much else these days … is favorable for the wealthy, but puts most everyone else at a disadvantage, let’s look at an article by Josh Boak, the Economic Writer for the Associated Press, as it appeared just the other day in The Pasadena Star-News.
http://www.pasadenastarnews.com Friday, April 25, 2014 9:56:09 AM
WASHINGTON — For three decades, the U.S. middle class enjoyed a rare financial advantage over the wealthy: lower mortgage rates … Now, even that perk is fading away … This trend reflects the widening wealth gap between the richest Americans and everyone else. Bankers now view jumbo borrowers as safer and shrewder bets even though conventional borrowers put less capital at risk.
Lending Conditions Reflect Greater Economic Realities
When reading Mr. Boak’s article, it doesn’t take much perception to see that the mortgage market and the real estate market are both reflecting realities that exist in the economy on a wider scale. From employment to wages and all manner of measurements, the economic recovery we’re experiencing as a nation, though undeniable, has been quick to accrue to the benefit of the wealthy, while it tends to leave behind the middle class behind and anyone not in the top percentages of earners.
The real estate market is generally considered “good” right now. Good for whom is an interesting question, and one we’ll need to discuss more in the coming days.