Bubble, Bubble (Con’t.)

A few days ago, we noted developments in California housing market that may suggest a revival of the “bubble” or at least the early stages thereof. Click here.  Today we get a significant follow-up story.

The Los Angeles Times reports that loans are again being made to home buyers whose credit ratings — how shall we put it? —  are less than stellar. E. Scott Recard, Lenders Venturing Back Into the Subprime Market, L.A. Times, April 27, 2013, Business Section.

The sort of loan described by the Times as representative of this market segment  requires 35% down and interest on the mortgage at 10.9%. A far cry from the “bubble days” but the point of the Times article appears to be that would-be homebuyers with low credit ratings are again able to obtain home purchase loans, with all the risks associated in that reflecting the higher risk.

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