Norco Herrington

Posts Tagged ‘life insurance’

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The real estae world has been sent completely on its ear lately, with bailouts, credit crunches, foreclosures and more. What’s in store for us now? Is there any way to guess if the rates will continue to go down?

Usually, with conditions so tight in the credit markets, one would expect lenders to lower their rates to attract the best customers. But instead, banks are tightening their purse strings for all borrowers and even the best risks are seeing higher rates.

This seems like a poor business decision; usually a business will lower prices when business is bad in order to get whatever business they can. Matters in the financial industry are far from normal, right now, and credit card companies are also using this strategy of higher rates to increase revenue in this tight market.

In the good old days, a slowdown in the economy would usually mean a decrease in interest rates since lenders would try to attract more customers with attractive rates. But with the banking industry in turmoil, it seems like none of the old rules count.

How should a homeowner view this crisis, and what things should he be doing? Take a wait and see attitude and hope that the situation will return to normal, with lower interest rates, or take advantage of any credit that can be obtained, regardless of the rate?

Some pundits are not only predicting a recession, but even a depression, accompanied by deflation instead of inflation. Normally, deflation will in turn lead to lower interest rates, so this indicates a wait and see approach is the best to take at this point.

Loans are still available. Many small banks are not suffering from the credit crunch that has hobbled many big banks. In this case, being small was an advantage, since many of them were insulated from the issues now haunting most of the credit industry.

There is another good reason for waiting to buy right now and it is because housing prices probably still have a way to come down. A study of home prices conducted by researcher Case-Schiller indicates an average decrease of 17%, but some areas with home prices falling 25%. If the scenario is set not only for lower rates, but also for lower housing prices, it would seem smart to wait until more of the credit crisis fallout can be judged.