The easy credit spigot is getting cranked a bit tighter
Of course, that means less buyers, longer listings, and declining prices
The bond market is popping the dreams of home ownership for some Americans.
Home buyers who can only afford to buy homes with lower adjustable-rate mortgages (ARMs), those who can scrape into a house with more "exotic" loans with low teaser rates, and some investors contemplating second home purchases could be soon shut out as short-term rates rise, analysts said.
Higher ARMs rates will next year further crimp housing demand, which has shown signs of fatigue in recent months.
ARMs have allowed more people, including risky borrowers with spotty credit histories, to buy homes for the first time
While ARMs have been instrumental in expanding home ownership, their rapid growth in recent years worried regulators because speculators have used the more exotic types of ARMs to buy and quickly sell properties, especially condominiums.
"I think people who were trying to get into investment properties and trying to flip them won't see those financial advantages with the short-term rates being higher than the long-term rates," said Bob Moulton, president of Americana Mortgage Group in Manhasset, New York.
December 30, 2005
Posted by blogger at 12/30/2005