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Yankee

Yikes! Some Scary Facts About The Mortgage Market

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An excerpt from the Dallas News:

" Consider a few facts:

•The collateral backing mortgages is stretched precariously thin – one in 10 homeowners has zero-to-negative home equity.

•Recent estimates put one-quarter of all mortgages underwritten last year in the subprime, or riskiest, category. That's well above the 13 percent average share for the decade through 2005.

•Even after adjusting the rate downward to account for Hurricane Katrina, mortgage delinquencies ended last year at 4.55 percent, an 18-month high. And subprime delinquencies are pushing 12 percent.

•Despite historically low borrowing costs, households spent a record amount of after-tax income at year-end to pay required principal and interest payments.

•In the next two years, about a quarter of all outstanding mortgages – or more than $2 trillion worth – will reset at higher rates.

•A record 62 percent of commercial banks' earning assets are mortgage-related...."

And this:

"Of course, we've lived through credit bubbles and their aftermaths before. What's new this time is how concentrated the banking system's bet is on the future of real estate.

Throw hedge funds' role into the mix and you've got all the ingredients for a batch of systemic risk."

Yeah, yeah. I know you Brits aren't interested in what's going on over here. But plug your own numbers into the facts above and you'll find we're in the same sinking boat.

Here's the link:

http://www.dallasnews.com/sharedcontent/dw...n1.90f03f2.html

Edited by Yankee

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I'm convinced the interest rate "messing about" that the Bank Of England have done (in 2004) was for two aims

1. To ensure the UK housing market didn't go tits-up before the General Election.

2. To accept that we're heading for difficult times, but not to risk going into outright recession BEFORE the USA also goes into recession. This way we sync with the US and minimise the amount of pain over here.

So. I am interested in what's going on is the US of A!

Particularly now the US interest rate action is hotting up!

:)

Edited by megaflop

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An exerpt from the Dallas News:

" Consider a few facts:

•The collateral backing mortgages is stretched precariously thin – one in 10 homeowners has zero-to-negative home equity.

•Recent estimates put one-quarter of all mortgages underwritten last year in the subprime, or riskiest, category. That's well above the 13 percent average share for the decade through 2005.

•Even after adjusting the rate downward to account for Hurricane Katrina, mortgage delinquencies ended last year at 4.55 percent, an 18-month high. And subprime delinquencies are pushing 12 percent.

•Despite historically low borrowing costs, households spent a record amount of after-tax income at year-end to pay required principal and interest payments.

•In the next two years, about a quarter of all outstanding mortgages – or more than $2 trillion worth – will reset at higher rates.

•A record 62 percent of commercial banks' earning assets are mortgage-related...."

And this:

"Of course, we've lived through credit bubbles and their aftermaths before. What's new this time is how concentrated the banking system's bet is on the future of real estate.

Throw hedge funds' role into the mix and you've got all the ingredients for a batch of systemic risk."

Yeah, yeah. I know you Brits aren't interested in what's going on over here. But plug your own numbers into the facts above and you'll find we're in the same sinking boat.

Here's the link:

http://www.dallasnews.com/sharedcontent/dw...n1.90f03f2.html

Thanks for the link, which certainly highlights the risks of the credit boom. There's a lot of interest on this site in the US housing market and economy generally. Plus the international linkages and flows of which it is a part.

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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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