ABC Highlights 'Glimmers of Light' in Lending Market
Itâ€™s not often when members of the media highlight positive aspects of the economy, but thatâ€™s just what ABC financial contributor Mellody Hobson did on â€śGood Morning Americaâ€ť June 3.
â€ś50 percent of U.S. banks have tightened their lending standings over the last year so thereâ€™s no question itâ€™s harderâ€ť to obtain a loan,â€ť Hobson told anchor Diane Sawyer. â€śOn top of that, most small business owners use their homes as collateral to secure those loans and then fewer banks want to accept the homes as collateral.â€ť
But, she added, â€śthere are some glimmers of light, one of which is that in really tough economies, fewer people actually start small businesses and that means that demand for loans is down. Actually nationwide demand is down about 15 percent so that means that because thereâ€™s less demand thereâ€™s less competition for the loans that are out there so if youâ€™re really, really aggressive there is an opportunity.â€ť
There are also â€śrays of lightâ€ť in the housing market, according to Hobson. â€śA 30-year fixed-rate mortgage can be had for 6 percent. Thatâ€™s still at historic lows.â€ť
And student loans: â€śFirst and foremost, students can now borrow more money from the government than in times past.â€ť Student Loan Act of 2008
Hobson didnâ€™t sugarcoat the economy, noting that getting a good small business loan means â€śgoing out and trying lots of different banks and really making the case for why your business is going to be successful.â€ť She called the housing market â€śbrutalâ€ť and said itâ€™s â€śmuch harder to get a student loan than it ever was before.â€ť
But she also educated viewers on the opportunities for loans, especially for graduating students. She encouraged them to consolidate their loans after graduation, to obtain one fixed interest rate and ultimately save money.
â€śThe government gives you one opportunity, one time to consolidate all of those loans and basically refinance them,â€ť she explained. â€śThey set the rate once a year on July 1. And this year we know the rate is going to be much lower than it was,â€ť Hobson said. â€śIt will be 3.9 percent, which is a pretty steep drop from where we are today, which is around 7.2 percent. Theyâ€™ll save about $450 a year, which is good news for students.â€ť