Is Utah Economy Safe From Sub Prime Lenders?

None by Eric Ray

(KCPW News) A large number of sub prime mortgage lenders are going out of business across the country because they face the daunting task of buying back loans from defaulting clients. This epidemic has many in Utah wondering how this will affect the local economy.

Jeff Thredgold, an economist for Zions Bank, says the threat to the Utah is limited because the economy is doing well and the housing market is strong. Utah currently has the strongest housing market in the country, up an average of 17.5% over the last year.

Thredgold points to markets where people pay top dollar for a house with an interest-only mortgage as the trouble spots for sub prime lenders. Owners are now being hit with the double whammy of rising mortgage rates and a declining property value.

Thredgold suggests opening mortgages through established companies who have been around for a while. He says the risk is dealing with companies that have only been open a short time and has limited capital.

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