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Banks Ease Lending In 2013 and The Years Ahead

Posted on 01, Apr, 2013


The bursting of the property bubble in 2008 taught both the people borrowing money and many of the banks a very valuable lesson. This lesson was simply that you shouldn't borrow an amount you never had the ability to repay in the first place. Conversely for banks, unless you want to wind up with a ledger full of nothing but bad debt then avoid lending to people who you know can't afford to repay you.

Fallout from the financial crisis, which affected both the United States and the rest of the world, has meant that the ability of an average person to get a mortgage, or even a small personal loan, has been almost zero. Most people wound up with so much debt as a result of the property boom, and the ensuing bust, that their credit score was effectively zero, with hundreds of thousands of people having to file for bankruptcy as a result of their unwise investments.

Now that the country has avoided the fiscal cliff and with the winding down of the conflicts in Iraq or Afghanistan it's time to look forward to a period of recovery and it appears that 2013 is set to be the first year in that regard. Although the Maya prophesized that the world would end on December 21st 2012 it appears that the world has at least been partially reborn in a financial sense. Banks now look set to be both willing and able to offer consumers mortgages again this year, albeit with the "Ability-to-Repay" and "Qualified Mortgage" rules being strictly adhered to. Nobody wants a repeat of the Fanny Mae and other such financial fiascos.

The simple fact that many people have been unable to borrow money over the last few years has put additional strain on millions of families across the country. What's even more frustrating for people to see is that the massive bailouts many of the banks received were used to shore up their own losses and pay fat bonuses to the same directors who oversaw the destruction of the mortgage "industry" in this country. People need to borrow money and new families will need a mortgage so the easing is good news in more ways than one.

In terms of the possible effects on the average person in terms of taxes this will most likely be negligible in terms of direct taxes but there could still be a tangible improvement in your finances because of the availability of loans and mortgages. There is the possibility that as the market becomes more fluid and that banks will either reduce the interest rates on loans and mortgages voluntarily, or maybe be actively "encouraged" by the US Government to do so instead.

For many families across the United States a simple drop of .25% or .5% on any debt they might have could mean having some disposable income each month - the same disposable income which could be spent in local businesses and reviving the sluggish US economy.



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