The central issue addressed by the April 2006 Economic
Outlook issued by Freddie Mac on Monday is the conflict created
between the strength of the economy and the increasing lack of housing
affordability.
The report goes on to tie this lack of affordability
to the growth in the popularity of adjustable rates mortgages and
especially to nontraditional ARM products such as negative
amortization and interest only loans. Use of these types of loans is often
the only way families can qualify for a mortgage in these high cost
communities. According to data from LoanPerformance quoted in the report
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Filed under: home purchase, housing bubble, housing starts, Real Estate Market, Real Estate Outlook, Housing Outlook, housing market, Housing Market Slowdown, pay option, hybrid arms, negative am