Categorized | Investing

Real estate remains sluggish in spite of boosts

Real estate remains sluggish in spite of boosts
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The real estate market is refusing to bounce back to life in spite of all the boosts and incentives it is receiving from governments and the financial institutions. The real estate industry was one of the hardest hit in the global economic crisis but even several months after the crisis is over, this industry is still fighting to survive.

In spite of high interest rates, interest rates on mortgages and housing loans have been reduced by the banks so as to encourage people to buy property, but this does not seem to be working. The 15 year rate got to a record rate of about 11.75 percent as far back as in the early 1990s but now offered at 4.5 percent. Some of the banks are even offering the loans for as low as 4 percent. This is almost like borrowing for free.

All these measures are however not encouraging people to buy homes. Real estate agents say that, sales continue to reduce each month. Though experts say that the market is recovering, agents and market players say this is not reflecting in sales.

One problem that has been attributed to this is that, many banks are reluctant to approve mortgages except for people who have an extremely good credit score, preferably above 700. They also require borrowers to be employed and also have enough money for the downpayment. Since most people do not have enough cash to pay for properties, if the loans are not approved, they cannot buy.

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About Drew Wilson

Drew focuses on the Commercial and Mortgage/Finance categories.

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