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Slowing U S Market Sees No Let Up In M E W

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A slower housing market could affect the economy by weakening construction employment and slowing consumer spending as homeowners have less ability to extract home equity.
However, a report by mortgage giant Freddie Mac Tuesday indicated
consumers continue to borrow against the value of their homes.
Fully 80% of Freddie Mac-owned loans that were refinanced in the fourth quarter of 2005 resulted in new mortgages at least 5% higher than the original loan balance. That's up from 73% in the third quarter.
overwhelming majority
of these borrowers were extracting home equity rather than trying to reduce their monthly payments,"
says Freddie Mac chief economist Frank Nothaft, adding consumers were using cash-out refinancing because 30-year mortgage rates near 6.25% are below home equity rates, linked to the 7.5% prime rate. People with adjustable-rate mortgages might also be refinancing into fixed-rate loans .

The scary aspect of this debt servicing debt scenario is that when it stops there is nothing to underpin the asset base that has been formed. Its like 1929 but far worse.

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This is going to be tragic for the mewers - and, more importantly, for tens of millions of others who will be caught up in the mess that results. How on earth do they imagine this is a sustainable way to run an economy?

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  • 342 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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