In recent years, things haven’t been good for the economy — and both private and business sectors are still suffering as a result. In the U.S., President Obama recently announced that, over the last few years, the economy has shown some signs of improvement.
The president reported the creation of 7 million jobs over the last three years, a slowing in the growth of health care costs, and some improvements in the housing market.
Improvements in the housing market would certainly come as welcome news to anyone wanting to get on the property ladder — especially since applying for a mortgage can be a tricky business these days.
However, there’s more than reason enough to suggest that the improvement isn’t organic.
Signs of Fake Progress
It’s become a trend for large firms to cash in on the low property prices presented by foreclosed homes. While there are risks when buying a foreclosed home, the cost cuts are incredibly attractive to such companies. States such as California, Illinois and Florida see a lot of foreclosure, and some Wall Street firms are eager to jump on the cheaper properties.
Mass purchases like these affect local realtors, which are forced to increase prices of the homes they have on offer. However, it looks like mortgage interest rates being forced lower could be the silver lining to this cloud, as banking and mortgage expert Mark Hanson explains:
“After five years of interest rates being forced incrementally lower each year, and everybody that qualifies refinancing over and over again, the jig is up for a while at least.
“The mortgage market is now so efficient — and rates have been at historic lows for so long — there is simply nobody on the proverbial ‘fence’.”
Call to Action
While the U.S. continues to struggle as far as encouraging first time home buyers to apply for mortgages, perhaps a leaf can be taken out of the UK’s book with the Funding for Lending scheme.
With plenty of resources available to first-time buyers and advisors such as Totally Money always on hand, getting first time buyers on the property ladder is something the government is actively interested in encouraging.
And increase in organic housing sector growth will mean wonders for the economy — so perhaps there should be a similar scheme implemented here?