Without somewhat loose standards, borrowers wouldn’t qualify. It would constrict spending, and the economy would suffer.
When some people use credit cards, they are agreeing to rates up to 30%… Those that use Payday advance have rates up to 400%…. These lenders are taking risks with unsecured debt. Is it the govt’s job to outlaw this ?
Even if 100% home financing is abolished, there will still be those looking to borrow based on their monthly repayment, regardless of rate, and there will be parties willing to loan at some rate.
Car dealers sell cars to the masses based on payments, not rates.
90% home financing several years ago is now 100% (or higher) in many cases.
There is so much paper wealth around, it’s insane. More than ever before.
My guess is that if one quarter of the population wanted to cash out, it would create an economic collapse.
Because people are convinced to stay in the stock market when it declines and hang on to homes in a declining market, it keeps a real collapse from happening. “it’s only a correction….”
There is a small % of homes on the market right now and it is a crisis. People talk about a home still being “worth”
$700K today, but if 25% of people wanted to cash out at the same time, what is that house really worth ?
The same applies to stocks. As long as inventory is held and off the market, and there is a (false) sense of security of “worth” it’s harder to have a real collapse.
1930’s depression cured an entire generation of wanting to hold anything other than cash, and some wouldn’t even put it into a bank. They remembered waiting in line and unable to get it out.
Many people with home equity today are also unable to get it out, as they don’t qualify to get a decent loan.
We are all guilty of complacency today with anything other than cash.
I’m not predicting an economic collapse, but am aware that it could happen. I think that anyone who says it can’t is fooling themselves. I hope that it doesn’t happen.
