Nov 30 2007
Subprime Crisis Update
Sometimes it is difficult, when so many sources of information are conflicting, figuring out who to believe. The chief economist of the NAR (National Association of Realtors) seems to think things have already bottomed out and are starting to rebound, but he represents Realtors, many of whom are hurting right now from falling prices. Taking a stroll down almost any street in America would tell you otherwise.
Thousands upon thousands of subprime loans have yet to reset to higher interest rates, but when they do, you can expect the market to continue its decline. It looks like the bulk of the subprime loans will reset in 2008.
The increase in reset loans will likely mean more foreclosures if refinancing doesn’t take place, or the lending companies decide to reset rates to what borrowers are currently paying. Some money has to be better than putting your company out of business, right?
Take a look at this chart from Bank of America Securities and you tell me when this housing funk we’re in might end. Hopefully we’ll find a way out of this mess soon!
[…] many Adjustable rate loans are on the verge of resetting. The onslaught of foreclosures can send the economy in a downward spiral yet again, but the real […]