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The Domino Effect of Sub-Prime Lending on Move-Up Home Buyers

April 4, 2007 by Scott Kinne

Sub-prime lending can create a domino effect

Wondering how the dramatic change in sub-prime mortgage lending will impact you?

Try this stat on for size:

Since 1998, 1.4 million families have used sub-prime mortgages to buy their first home.

As sub-prime lending guidelines get tighter, there will be fewer first-time home buyers and that impacts every homeowner in the country.

The reason lies in “move up” buying.

When a sub-prime family buys their first home, the sellers of that home likely “move up” to a bigger home. In turn, the sellers of the second home may move up, too. And of the third home. And fourth, and so on.

Somewhere in that chain of events, all of our homes are represented.

Without sub-prime mortgages, maybe the move-up buyer is less prevalent with fewer buyers we could see higher home supply.

We are all connected in the real estate economy. What’s good for one, is good for all. And, the reverse is true, too.

Source
Testimony of Michael D. Calhoun
Center for Responsible Lending
March 27, 2007
http://www.responsiblelending.org/pdfs/House-Calhoun-Mar27-final.pdf

Filed Under: Uncategorized

Scott Kinne

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Vice President, Senior Loan Officer
NMLS ID #182351
Office: 703.293.6146
Mobile: 571.237.6241
Fax: 571.317.2478
skinne@fhmtg.com

Licensed In Maryland, Virginia, Washington D.C., West Virginia
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