Is Credit Still Flowing
http://www.independent.org/blog/?p=201
This piece indicates that the credit problem is being way overblown, as commerical, industrial, and real estate loans have all been up in recent months. They link to what looks like legit government info.
If this is accurate, how are we in a credit crunch?
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most of the data is from
most of the data is from August. Things have shifted dramatically since lehman fell.
you will need to learn very
you will need to learn very quickly that yesterday is old news...not to mention that more has happened in the past 2 weeks than the past 2 years
As I've mentioned before,
As I've mentioned before, I'm a multifamily (apartment) lender and have many friends in the single-family market. I don't have specific digits to back up my claims, but yes, credit is still flowing quite well. There appears to be plenty of liquidity--it's the borrowers who seem to be balking, not the lenders. In its most simple terms, the borrowers 1) seem to have no confidence in the foundations of the lenders and 2) don't want to meet the more stringent credit demands, which aren't absurd at all--680+ credit score, 10% down, an actual job, and debt-to-income ratio under 40%. On the commercial side, 20% down, 1.25+ DCR, etc. Basically, borrowers don't like the fact that lenders are demanding, ya know, creditworthy investments, which many borrowers simply aren't used to after years of free money and garbage underwriting.
There seems to be panic because credit is no longer...free. We were at a point for 2 to 4 years where credit was basically free, and real estate prices reflected that. Real estate prices have collapsed, a lot of lending institutions and other affiliated organizations have gotten hammered, and the smaller, more conservative lenders are still here today ready and willing to supply capital to people who are willing to pay their debts. And the GSEs are swimming in capital.
It's my humble opinion--and I could very well be wrong--that the bailout is utter garbage and a complete waste of tax payer money. Although, it appears as though the government has foolishly talked the situation to the point where the system could collapse out of fear and panic if a bailout doesn't happen--self-fulfilling prophesy. Yes, lending has contracted about 50% year over year, but it's mostly because credit standards have become more strict and borrowers are trying to figure out how to actually analyze good investments rather than getting a handout.