Wednesday, Feb 13, 2008
US credit crisis escalates as defaults spread
TELEGRAPH UK: Defaults in the US housing market are spreading from sub-prime to the much larger stock of top-grade housing debt, threatening to set off a wave of even bigger losses for banks and investment funds.
The Mortgage Bankers Association says default rates on all outstanding home loans in the US have reached 7.3pc, the highest level since modern records began in the 1970s.
Arrears on "prime" mortgages have reached a record 4pc, confounding expectations that middle-class Americans with good credit records would be able to weather the storm.
While sub-prime and close kin "Alt A" total $2,000bn (£1,019bn) of debt, the prime market in all its forms is roughly $8,000bn. If prime default rates rise on their current trajectory, they could ultimately cause huge financial damage.
Posted by chris @ 03:27 AM (136 views) Add Comment
1 Comment
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1. lvmreader said...
The label "subprime" is just that. A label. And a bad one
What we face here is a mispricing of risk. Period. Especially to those who are overlevered
The idea that "unemployed black men in string vests sitting on a porch in Alabama" are the root cause of this is nonsense. That segment of the market was always dwarfed by the so-called "middle classes with good-credit" who just wanted that bigger house, better car, more exclusive holiday and more nights out at restaurants.