The Newspapers Talk Nonsense About Mortgages!
I was confused when I read the headlines on the front page of the Daily Express earlier this month which stated, "Home loans get cheaper at last". The articles went on to state that, "the average interest rate on a 2 year deal stood at 6.36% in July for borrowers with a deposit of 25%, down from 6.6% in June".
There are two reasons why I have to take umbrage with this headline. First of all, mortgages are not really getting any cheaper. If you love baked beans, and over the course of 6 months, the supermarket raise the price from 50p a tin to 6 a tin and then reduce the price to 5.99, does that mean that beans are getting any cheaper? No - it means that the Spin Doctors are trying to put a positive spin on an issue which is almost wholly negative.
The second issue I have is that there are only a small amount of people that such miniscule changes will actually benefit. The criteria tightening that has occurred alongside interest rate hikes means that less people are able to take advantage of the rate reduction. For example, imagine you are selling ice cream at a park on a hot summer's day. You have the best ice cream in town and only charge 10p a cone BUT you are a very fussy ice cream van owner. You will only sell to people who are aged between 18 to 39, have been in employment with the same company for the last 5 years, have 25k in the bank (and can prove it) and have their passports with them! Do you think you'll sell a lot of ice cream?
Once again, this is another example of how the papers sensationalise the littlest things just to shift some product. The truth of the matter is that mortgages are still expensive and are more difficult to obtain than at anytime since the 1970s!
Ask the Expert, Sara J. Lipowitz: What to do if your mortgage is ... - Santa Cruz Sentinel
Housing woes are bad but will likely get worse, some economists ... - The Miami Herald
Interest on 40-, 50-year mortgages probably isn't worth it - The Newark Advocate
AFP Interest on 40-, 50-year mortgages probably isn't worth it The Newark Advocate, OH - Remember, lenders and home owners got into trouble with interest-only mortgage loans in which the buyer had a certain period of interest-only payments, ... Mortgage Rates Continue to Fall MORTGAGES AGENCIES-Risk premiums leap, 'just no buyers' Fannie Mae, Freddie Mac suspend foreclosure sales -