New House Builder | Last week, we got even more evidence that the mortgage system is seriously out of whack. This week, the Fed speaks and we get several reads on the housing market. The Census Bureau reports on new construction and the National Association of Realtors releases existing homes data. Across the pond, architects have designed an incinerator that blows smoke rings. Seriously. Read on.
Prices are up, mortgage borrowing is down. Huh?
Mortgage borrowers are doing a better job making their payments, and it’s no wonder. Only people with the best credit histories are getting loans.
A report from the Federal Reserve Bank of New York quantifies what we’ve known for a while, that the anything-goes mortgage heyday is well behind us. Of course that’s good. We don’t want a rerun of the mortgage bubble. Foreclosures are at their lowest since 2007 and delinquencies are down.
Here’s the flip side. As a country, we’re holding less mortgage debt, even as houses get more expensive. The sum of all mortgage balances fell $55 billion in the second quarter, to $8.1 trillion, the Fed found. During that period home prices rose about 6 percent from a year earlier.
What’s happening? Fewer of us are buying houses, buyers are putting more money down and cash investors are still big players in the market.
The broken mortgage system is a big culprit in all three cases. Lenders and borrowers are subject to more government regulation and banks have drawn their own rules tighter still, going to great lengths to avoid losses, fines and public shaming. The upshot–mortgages are harder to get, even for people who deserve them. - Redfin
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