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Consumers are still willing to run their lives based on credit, so says an Associated Press report. Consumer borrowing increased at an annual rate of 7.4% in November compared to an increase of just 1% in October - ah yes, the faux magic of a consumerist Christmas.The truth of the matter rests in the cause for the rise. Is it because consumers are still confident in their earning potential? The more likely cause is that consumers are running out of funding options, read that -- they're running out of cash.
So why is it that mortgages are getting harder to write but consumer purchases can still be funded with just a signature? Although they're deflating in value, homes still provide significant backing for lenders to lean their bets on whereas credit cards float in the unknown. With bankruptcies at an all time high, are we setting up for the final crash?
It's a mystery to me why I'm having trouble getting a $50,000 mortgage on a $70,000 property when I carry a total debt load of only $8,000, secured by a vehicle worth 50% more than that, yet I can get credit of $20,000 at 15% interest with just a quick swipe of my pen. Nearly every day, pre-approved credit applications jam my mailbox with offers of easy money and no credit check, but no one wants to bet on the house that I'm writing to you from. How dumb is that?
My message to lenders is simple, and I'll put it here for you all to see:
If there's a bank that wants to fund my mortgage based on my desired real estate, my income and a relatively solid credit history, they're welcome to discuss it with me. However, if there are any lenders who want to forward me $20,000 based on my signature and without a credit check, they're the stupid ones and they can kiss my...
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