I want to compare different mortgage lenders rates for me but I don’t want them all pulling my credit & lowering my score. My credit score is 739, and a place told me 6.5% yesterday. What is the average rate for good credit?? Can I get a better rate from my bank or a mortgage company?
CPI (Consumer Price Index), is an index of consumer goods like TV’s, iPods, phones, clothing, ect. People, generally, only spend available income on these items. So CPI gives you an idea of what nominal inflation is.
Housing is a different story, because the are debt based purchases. In more fiscially conservative times, a down payment of 20-50% was generally a requirement along with total loan being no more than 2-3x what your yearly wages were with a payment period no longer than 10 years. This kept housing in line with wages because of the strict rules.
We expanded it to 30 year loans, but it was still relatively moderated because of risk. This is why historically housing prices followed inflation.
Since the expantion of credit and loosening of credit rules as lenders learned to turn morgages from illiquid assets to tradable bonds, this has stopped. As such, they are less tagged to income rather than the amount of credit a bank is willing to lend you. Therefore, inflation in the housing market and not an equal inflation of the CPI tells us that the current inflation in housing is an inflation of credit. This is part of why the Fed no longer prints the M3 report that would give us total inflation, that is nominal inflation plus credit inflation. Experts estimate that the real inflation is closer to 10-14%, not the 2-3 the government reports.
Remember, all prices follow the expansion or contraction of available money and credit plays into that. This is exactly why you have neighborhoods in Cali were houses are $400,000+ but only have a median income average of $90,000.
Like all credit bubbles, prices will deflate to what the market is actually capable of paying. Which suggests that these $400,000 starter homes could deflate by more than half.
Inflation is way below house price rises, immigration is a major factor for the shortage, and shows no sign yet of improving, a lot of things though are not taken into account to give inflation percentages ie gas, electric and other fuel increases! Its a false inflation rate and is why pensioners and people on benefits fall further behind and the rich get richer! I am none of the above, i am a middle aged worker!
In other words, can a property appraiser who’s appraising a home compare the subject to other comparables that have sold on short sale and or foreclosures.
