Real Estate is the BIG ticket item for Banks and the American Homebuyer.
Interest rates have been at a all time low for the last 7 years.
The reasoning for this low interest rate was to stimulate the home and commercial construction and their respective resale markets. This has not happened.
Why? Because the American economy is depressed. American's Jobs and Industry have been sent to other countries around the world.
Americans have had their work hours and income cut in addition to having to find new businesses and work. How can you buy Homes for 100's of thousands of Dollars when you are making only $7.50 to $19.00 an hour. This number needs to be $20. to $50. dollars an hour, average, for Union and Technical employees, for a USA recovery.
In our realistic example below, lets pre-qualify a husband and wife that earn $12.50 an hour each based on a 40 hour week for a home, two cars and two children.
Gross Income $52,000. Annual (2015)
Qualifing Ratios: 33% /38% Max.
$4,333.00 Gross Income Monthly
Average Cost of a US Home $249,000
Example Home Price $125,000 @ 4.75%
$ 852.00 House Payment - Ratio: 19.7%
$ 516.00 All Other Debt - Ratio: 31.6%
$ 854.00 Food
$2,222.00 Total Debt
$1,083.33 Income Tax - Ratio: 25%
$3,305.00 Total Of Above Expenditures
$1,028.00 Family Cash $34.26 Daily
AMERCIANS ON THE ECONOMY
Red = Worse
Prime Lending Rate ~ Increased 0.25%
(Issue: Lenders will usually hedge a increase that tends to double the actual increase)
|US Prime Rate
||3.50% - UP
|USA Consumer Confidence
||15 Month Low
|Black Friday turned Red
Compared to 2014
|| Retail Value
|Item Costs $10 in 1990
||$18.16 in 2015
|Item Costs $10 in 2000
||$13.78 in 2015
|Item Costs $10 in 2008
||$11.02 in 2015
|$1.00 in 2008 you need
||$ 1.10 in 2015
|$1.00 in 2000 you need
||$ 1.38 in 2015
|$1.00 in 1990 you need
||$ 1.81 in 2015
$24,000 - Annual Income is considered Poverty Level in the US. <$66.66 Daily>
43,502,782 - people are living in Poverty 7.41% - of the US population.
Up 3,699,544 from 2008.
|39% ^ - US SPENDING FOR 2015
12/31/2015 430 BILLION OVER BUDGET
|1 TRILLION 100 BILLION BUDGET
FEDERAL RESERVE INCREASES THE PRIME LENDING RATE IN AMERICA
The Prime Lending Rate to Banks increased from 3.25% to 3.50% on December 16, 2015.
There has been an indication by FHLMC-Freddie Mac that they are not increasing their Rates on Mortgages.
A closer look indicates that Freddie is now CHARGING 0.5% (a half point) for the Lower Rate instead of 0.0% "zero point".
History shows that when the FED raises rates, all Credit Markets increase their rate to the Consumer including Mortgage Interests Rates who ranks #1.
The FED's move is in the opposite direction of the Euro Central Bank who lowered their Prime Lending Rate to 0% on 11/30/2015.