The big story: credit pinch

This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.

The biggest housing story of the past couple of weeks, in our opinion, is the ongoing tightening of credit, at the retail level and higher on the financial food chain. These may not be big headlines, but every day major lenders are eliminating some of the risky loans (2/28s, 3/27s, stated income, etc.) that created demand and pumped up housing prices.

Item: Wells Fargo, a major player in sub-prime loans, on Monday said it will no longer offer 2/28s (two years at a low teaser rate, 28 years at higher adjustable rates).

The squeeze is hitting corporate borrowers as well: ‘The cost of raising money in the junk bond market continued to surge Monday, spurring online travel firm Expedia Inc. to sharply scale back plans to borrow money to buy back stock. ... Since mid-June at least six companies have pulled junk bond sales. This month U.S. companies have sold just $708 million of junk bonds, the slowest pace for any July since 1994, according to Dealogic.’

Your thoughts? Insights?