Decrease in Mortgage Activity

[Oct 31, 2008.]

 

In an interesting article posted on Forbes.com that describes how Americans are changing their borrowing habits. According the articles source, Freddie Mac, homeowners are not cashing out as much equity as they have in years gone by. Whether they use the cash for debt consolidation, upgrades or other financial needs, homeowners are borrowing at the lowest level in 4 years. The reason for the decrease in borrowing is said to be pointed towards increased rates and decreased home values.

These numbers are important from an economic point of view. This decrease usually means a decrease in consumer spending and this spending is considered to be two thirds of economic activity. This is a good indicator for consumer confidence index which plummeted to the lowest point on record, since 1967, this month of October 2008. Ironically the consumer confidence index was release the same day the stock market posted the second highest gain in history.

The consumer confidence index is a survey of 5000 households and across the board these household felt that there is more financial uncertainty ahead. With increased costs for food and energy coupled with decreased home values this drop in the index should set the stage for a dramatic change in spending habits.

Hopefully this change will force consumers to change into savers who are conservative with their money. People should be aware of their need for debt consolidation and should decrease their monthly cash outflow. They need to keep money in the household more now then ever because their investments are not producing like they once did and people should be proactive about this situation.

Will people be able to change from hyper-consumers to a more conservative consumer? Only time will tell.

About the Author:

Brent Lane is a Mortgage Consultant in Roseville, California. He helps homeowners in California with their mortgage financing and writes on his BLOG at www.thelanegroup.blogspot.com

 

About Author:

Brent Lane is a Mortgage Consultant in Roseville, California. He helps homeowners in California with their mortgage financing and writes on his BLOG at www.thelanegroup.blogspot.com