Wikinvest Wire

An even longer schedule of loan resets

Monday, March 15, 2010

In John Hussman's commentary this week he's got another loan reset chart from Credit Suisse, this one peaking even later than the one that we've all been looking at since the onset of the subprime crisis back in 2007. In this one, things don't really settle down until late-2012 instead of early that year.

Below is a slightly different schedule than we've seen. It doesn't show the first round of sub-prime resets that ended in early 2009, and is based on different classifications, but is largely consistent with the overall profile we can anticipate.
IMAGE I should note parenthetically that as you read reports about the mortgage and credit markets during the next few months, it will be extremely important to pay attention to the time period being discussed. For example, we are seeing articles with very recent datelines that are drawing conclusions based on relatively pleasant data from the fourth quarter of last year, which reflects the end of the reset lull that was completed with the low in September.
Yes, that's probably good advice and it will be interesting to see what kind of a sales spurt develops between now and the end of April as mortgage rates begin to rise and the homebuyer tax credit expiration nears. It's a pretty safe bet that this year's housing data is not going to be nearly as "pleasant" as what was seen late last year.

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Anonymous said...

The tax rebates and subsidized interest rates didn't change the fact that the wrong mix of home sizes have been centrally planned. The median person can't afford the median home. They are just too big, and over priced.

They would have to bring back the NINJA loans to move them at the current price. Even if prices do go down a bit, they are still too large for the median person. Its not just a matter of servicing the mortgage. There is also high heating costs, property taxes, maintenance, etc...

Anonymous said...

Went to an open house this weekend in the San Francisco area.
House built in early 1900's.
Price over $600K.
The place was SWAMPED with people.
Buyer fever is in full swing, due to tax credits and low mortgage rates.
Truer picture will emerge later this year, after the Nov. elections.

Anonymous said...

San Francisco is kind of a weird place now where the normative middle class family is getting squeezed out by very high local tax and service rates. It is still a destination for those who can afford it though. And also, for bums because of the generous welfare offerings.

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