1/3 of American’s have mortgages coming due within two years. When they do, watch out! Industry analysts expect delinquencies to soar as over-leveraged homeowners can’t meet their new (higher) interest payments.
This week was a taste of what’s to come:
- 1 in 40 Americans is now over 90 days delinquent on their mortgage
- OwnIt.com, a large $8 billion dollar sub-prime mortgage lender closed its doors
- HSBC, the world’s 3rd largest bank, admitted its earnings would take a material hit because of mortgage defaults
- H&R Block’s Option One mortgage division announced a $39 million loss because of bad loans and falling prices in the mortgage resale market
- The cost of credit-default swaps (which are basically insurance for banks against mortgage defaults) has soared 25% to a five year high.
Keep an eye peeled for more of the same in 2007 as U.S. mortgage excesses shake themselves out.
(Sources: National Post, Bloomberg, LA Times)
Visited 1 times, 1 visit(s) today
Last modified: December 9, 2006
