Bye Bye Banks and Wall Street

[Alex]

Originally Posted by Ghoulish Delight

Or the other way to look at it - you actually have to be able to afford a loan to get it.

No, that isn't necessarily the other way to look at it. If the credit markets seize up sufficiently then it could easily get to the point that regardless of whether you can afford the mortgage there won't be anybody looking to lend. Or rather, the house will get cheaper but the debt servicing will get more expensive.

I don't know how far we'll go down that path and a lot depends on the nature and success of whatever bailout plan is eventually passed, but ultimately that is what they are seeking to avoid. Not so much individual corporate failures. That is the collateral damage.

[Ghoulish Delight]

Originally Posted by Alex

No, that isn't necessarily the other way to look at it. If the credit markets seize up sufficiently then it could easily get to the point that regardless of whether you can afford the mortgage there won't be anybody looking to lend. Or rather, the house will get cheaper but the debt servicing will get more expensive.

I don't know how far we'll go down that path and a lot depends on the nature and success of whatever bailout plan is eventually passed, but ultimately that is what they are seeking to avoid. Not so much individual corporate failures. That is the collateral damage.

Again, I agree that that needs to be avoided. But Morigoon is talking about people having a harder time now, which to me simply means they've stopped writing the blatantly bad loans for people who can't afford them.

[Alex]

Originally Posted by Ghoulish Delight

Again, I agree that that needs to be avoided. But Morigoon is talking about people having a harder time now, which to me simply means they've stopped writing the blatantly bad loans for people who can't afford them.

Yes, a lot of the questionable underwriting is flushing out of the system, but it is also true that solid borrowers are already finding it difficult (which generally just means more expensive) to get access to credit, in all kinds of areas not directly related to mortgages.