Josh, I would agree that the lenders are beginning to tighten credit. It’s a slow process and the easy financing market hasn’t seized up yet.
As the related postings on the woes of HSBC and NEW show, buyers aren’t very aware of the loans they take on so long as they can “afford” the houses. If a buyer today want to “afford” a house, the broker still has an array of lenders with initial teaser rates or incentives to shop his loan to.
All the loans are the same, but it’s all about marketing with the right “teaser rates” to get buyers to sign up.
I would say that Real Estate industry is all about finding ways to “reel” buyers in. So far, there are still buyers willing to be “reeled in.”
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Jordan Ash, the director of community activist group ACORN’s Financial Justice Center in Minneapolis, blames the mortgage industry for aggressively marketing expensive loans that only the savviest consumers can understand to people with little money and flawed credit. “In the mortgage world, it’s not a competition of who can give you the best rate — they’re all offering basically the same loans,” Ash says. “It’s who gets to you first and reels you in first. It’s who has the best sales pitch.”
