“I recently tried to refinance my mortgage,” former Fed Chairman Ben Bernanke said last week, “and I was unsuccessful in doing so.”
The audience laughed – but then he said “I’m not making that up.”
What does it mean when Bernanke – the king of printing money – can’t get his hands on any of the money that he printed?
When the former Chairman of the Federal Reserve can’t get a mortgage, you know something is not quite right yet in the housing market…
The pipes are clogged… there’s sand in the gears.[ad#Google Adsense 336×280-IA]Bernanke stated the obvious: “I think it’s entirely possible” that lenders “may have gone a little bit too far on mortgage-credit conditions.”
At the height of the housing boom, lenders went a “bit too far” in the other direction… In short, if you could fog a mirror, you could get a mortgage.
Now that lenders have been burned, and regulators have made things more difficult, the pendulum has swung in the opposite direction.
The right spot is somewhere in between…
We don’t need 2006’s “liar” loans… And we don’t need 2014’s standard either, where even the king of money printing can’t get his hands on any money.
Lending standards will undoubtedly loosen up from here…
Regulators don’t want to prevent capable people from buying a house (which is happening today). And bankers want to make more loans (to earn more profits).
In my opinion, we still have plenty of upside in the housing market…
We just need a little WD-40 to loosen up the gears of the housing market. We need the bankers to loosen up a bit, and the regulators to do the same.
The pendulum had swung too far in one direction during the boom. Now it’s too far in the other direction.
As those gears loosen up, and more people can actually get loans, house prices will move higher.
This is just one of many factors that make me excited about U.S. housing… The story is powerful… Mortgage rates (at 4%!) are once again near record lows. Housing is still incredibly affordable (when you look at the median income versus the median mortgage payment). There’s still not much supply out there yet. The list goes on.
When the former Fed Chairman can’t get a mortgage, you know things are NOT working “optimally” right now. But things will undoubtedly get better on this front… Banks want to lend you money. And regulators don’t want to keep you out of a home.
There’s still plenty of upside in U.S. housing.
Take advantage of it, if you haven’t already…
Source: Daily Wealth