It’s impossible to get a loan from a bank these days unless you have a credit score north of 700 and considerable documentable income.
The debt securitization market provided about 60% of lending money over the past few years. It has seized up.
Now the Federal Reserve has announced it plans to withdraw its massive interventions. It hopes the private sector will step up.
There’s not going to be economic growth until the security markets return to normal.
The commercial real estate securities market? It is dead. No such securities have been offered in two years.
New regulations and accounting rules are expected to further restrict bank lending in the next couple of years.
Few people want to buy bonds backed by home mortgages. Other parts of the security market are working. Bonds backed by consumer loans, auto loans, credit card loans, are selling normally, though only for those with credit scores over 700.
Commercial real estate is expected to be the next shoe to drop in our housing disaster. Next year $50 billion of securitized commercial property loans are supposed to be refinanced. If they can’t be refinanced, property prices will plunge. Banks will have to absorb new losses.