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Realistbear

Wall Street Journal Issues Warning On House Prices

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http://www.realestatejournal.com/buysell/m...15-hagerty.html

Millions Are Facing Squeeze

On Monthly House Payments

By James R. Hagerty

From The Wall Street Journal Online

Millions of Americans ( & Brits) who stretched themselves financially to buy homes face a painful adjustment -- some could even lose their houses -- as monthly payments on adjustable-rate mortgages are reset higher.
In the hot housing market of recent years, many households took advantage of "affordability" mortgage loans -- heavily promoted by lenders -- that hold down payments for an initial period. Now the initial periods are coming to an end on many of these loans, leaving borrowers to face resets of their interest rates that can cause monthly payments to shoot up between 10% and 50%.
A recent study by First American Real Estate Solutions, a unit of title insurer First American Corp., projects that
about one in eight households with adjustable-rate mortgages that originated in 2004 and 2005 will default on those loans
.

In California, 83% of the loans taken out in the latter stages of the bubble were "creative finance" loans. If 1 in 8 defaults it will trigger the biggest crash in history. The UK has a higher level of non-fixed rate mortgages than California.

Awooga time yet?

Edited by Realistbear

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  • 301 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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