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Credit crunch: Home equity lending evaporates

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posted on Dec, 25 2009 @ 01:34 PM
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Hocking the house for quick cash is a lot harder than it used to be, and it's causing headaches for homeowners, banks and the economy.

During the housing boom, millions of people borrowed against the value of their homes to remodel kitchens, finish basements, pay off credit cards, buy TVs or cars, and finance educations. Banks encouraged the borrowing, touting in ads how easy it is to unlock the cash in their homes to "live richly" and "seize your someday."

Now, the days of tapping your house for easy money have gone the way of soaring home prices. A quarter of all homeowners are ineligible for home equity loans because they owe more on their mortgage than what the house is worth. Those who have equity in their homes are finding banks far more stingy. Many with home-equity loans are seeing their credit limits reduced dramatically.

The sharp pullback is dragging on the economy, household budgets and banks' books. And it's another sign that the consumer spending binge that powered the economy through most of the decade is unlikely to return anytime soon.

Fu ll Story




posted on Dec, 26 2009 @ 11:33 AM
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Well, spending money you don't have on crap you don't need to impress people who don't care is no way to go through life, to paraphrase an old saying.

I have lots of sympathy for people down on their luck who can'T find a job or afford the basics, or are dragged down by certain types of loans like for health or education that just never worked out.

I have ZERO sympathy for "Mr. and Mrs. Too-Much-House" who are weeping in their cheerios because they can't get a new granate countertop for their Chinese-drywalled, poorly made "investment house" that is now 50% underwater. This is exactly the kind of garbagy, greedy, short-sighted thinking that got us in this mess to begin with and will take years to unravel. It's not Bush's fault, it's not Obama's fault, it's not Bernanke's fault (although all these people made the problem worse)...ultimately its the greed, piggish shallowness, and materialism of the US public who is to blame for "problems" like this. You want something, then save for it. Period. Otherwise work on curbing your desires themselves...its a lot cheaper and more mentally healthy. You won't find me weeping for a bunch of ex-fratboys in Dockers with a double-digit number of credit-cards and an 8,000-dollar flash-fry grill in the back yard who used to swagger around a few years ago because they finally felt like they'd "made it."

Maybe the silver lining in this mess is more people will discover what really matters in life...family, friends, community, tradition, mind and spirit, healthy bodies and minds, and so on.



posted on Dec, 26 2009 @ 12:30 PM
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reply to post by silent thunder
 


What that guy said


Oddly enough, I find my personal circumstances have improved somewhat since the start of the credit crunch.

Prior to it's onset, I had a bad credit rating and large debts from the days of me turning 18 and being offered loan after loan from the Bank. Being a young moron, i signed up to them, got into trouble and defaulted.

I've now paid back most of what I owe and the defaults are finally off my credit report, meaning I now have a perfect rating and my life is improving. What with the falling off on house prices, the non-stop retail sales and the fact I have a reasonably secure, well paid job things are actually beggining to look good!

I feel no sorrow for those that racked up endless debt based upon nothing but property speculation and credit card debt. It's those amateur property "developers" and speculators that drove the market through the roof anyway.

I tried warning my family and friends of the unsustainable property market, but no-one would listen and even in 2003 I saw it coming. I felt rather smug in 2007/8, I can tell you!

My own brother is one of these morons. A wallet full of credit cards and debts on them in the region of £20K, plus a mortgage on a city centre flat worth half what he paid for it.

Numpty.

Never mind though, as I said, things are looking up and I might be able to buy in at the bottom of the market, just like my Dad did in 1995. Bought his house for £80k and it's now "worth" £300k.



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