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Great reads from Nick Timiraos over at the Wall Street Journal:
His central point is that the mortgage market is starting to direct credit toward lower credit quality buyers.
We still think that the mortgage market remains pretty conservative, especially compared to the auto and credit card loan market, and other loans that you can get. House prices have risen sharply, especially out west, and many first-time potential buyers are priced out of the market.
There are many who think the mortgage market is excessively tight, but that isn’t obvious. The key question remains: can potential buyers service the payments on the large mortgages they need to buy pretty expensive homes? Logan Mohtashami is a loan manager in southern California who argues that income levels do not justify a lot more mortgage lending given how high prices are. His views are worth checking out: (@LoganMohtashami).