Interest rates for traditional Fannie/Freddie/FHA/VA mortgages are still in the same place, roughly 6.75 percent for the lowest-fee deals. These loans are fully available, underwriting unchanged, funding for closing as reliable as ever. The rest of the mortgage world ... jumbos about 7.25 percent; Alt-A for big-down high-FICO, 9 percent. NINE. In three weeks' time the clock has turned back to 1995. Four things to keep separate here: a short-term crunch in the banking system; huge long-term credit losses by investors; a cooling economy still with an inflation problem; and a withdrawal of mortgage credit that will make a housing recession worse. The credit crunch that began three weeks ago reached its end stage yesterday, the Euro-American banking system locked up altogether. Dramatic, but not dangerous: central banks are pouring cash into the system. Ice water will quiet a mob of hysterics, but will not solve the underlying problem. Which is: massive credit losses in the aftermath of T...
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