http://www.economist.com/blogs/graphicdetail/2013/12/daily-chart-13
http://www.marketwatch.com/story/home-equity-loans-are-back-pitfalls-included-2014-01-21
After the mortgage crisis in 2008, many homeowners found themselves under the financial situation that is "Negative Equity" where the mortgage of a person's home was higher than the value of the investment. Since then, Americans have slowly been returning to the market, buying and helping the circulation of money raise the economy. For the first time since 2008, Houses are nearing the equilibrium point of this detrimental phenomenon and house prices are finally nearing the mortgage levels. This graph shows the phenomenon.
In connecting the graph, the second article talks about how banks are beginning to give out more loans which has partially lead to the housing market's best year since 2009. The article states that home equity loans have, since the crisis, been growing at about 16% per year. This article further highlights the achievements that banks have been making and the trends that consumers have taken on in since the great recreation.
Something that stands out to me in this article is the fact that if more banks are giving loans more freely, this could lead to another scenario like the great depression. Not to say that giving loans would cause this, but it is a concern that banks and financial institutions should be aware and cautious of.
ReplyDeleteThe combination of banks lending again and relatively low mortgage rates (this afternoon the 30-year was 4.39% and the 15-year was 3.44%) is a great sign for the housing market. For those of us graduating this year, it makes more sense to take on a mortgage at these levels than to rent an apartment.
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