The housing market is a HUGE part of the economy in this country and correlates with the general mood of the country and a sense of wealth & security for many.
The govt has stepped in to create a market for mortgage backed securities along with govt subsidies, guarantees and insurance.
If there was no financing available for houses and
buyers had to pay cash, is there any doubt that houses would sell for less ?
If 50% down was required, they would sell for a bit more. If 25% down was required, prices would be even higher and when you get to almost nothing down, the prices become inflated.
What’s ironic is that the responsible ALL CASH buyer who has worked hard and saved to buy a house,
has to pay the same price that someone with crappy credit and no down payment has to pay.
Is it fair ?
If crazy financing didn’t exist, houses would sell for less. The prudent, responsible, all cash buyers would be able to buy 2 or 3 houses for the same amount of dollars and rent them out to those without the cash down.
The availability of financing a purchase allows for an inflated price.
If student loans were not available, I believe that higher education would cost less and those that truly wanted one would figure out how to pay for it.
Part of me believes that there shouldn’t be any auto financing and that credit cards should be ‘charge cards’ and required to be paid in full every month, carrying a balance should not be allowed.
