This is the main argument for a 2007 housing crash. This will probably bring the whole economy down as well. The home ATM machine will certainly be closed when the ARMs start adjusting.
HELOCs came along and provided not only an extra puff for housing but also the economy. So it is possible that some new financial instrument could be invented to keep us going. [Securitize your social security?]
The UK has had a year and a half run without house price escalation, which gives you an idea of the depth of this equity extraction. Hard to imagine how those who don't own houses are doing but the retail side still looks grim, even after a retracing of their prime rate.
I cannot see any reason why we would not follow a similar pattern assuming the exposure from risky loans is approximately the same.
When questioning Indian coworkers' ARMs with "what if you can't trade up or refi after 5 years", one thing that I heard was "I can go back to India". Whether this be true or not, it does not inspire a lot of confidence ...
And BTW nobody please think foreigners leaving the country will mean appreciably more jobs for locals ...
I worked at Enron and the rollover risk in the commercial paper market was a big part of the vise that squeezed Enron into the disclosures that sank the company.
Can the $1T in mortgages set to recast in 2007 simply refi into another alternative mortgage?
I know higher rates are affecting mortgage rollover risk what else is there?
Our resident experts, (acknowledged by the peer group to be knowledgable) [possibly unlettered, even with questionable experience, but whip smart] are all busy with other callers (putting the finishing touches on the next press release from Fannie) at the moment Aaron.
Tis true about that chunk coming up in 07, but no worries as long as the housing market values continue to be healthy.
Ok, robust.
Alright, booming.
Atleast more booming than say China or India who may be competing for these same funds. There are some who think that we have not overbuilt, that the population growth here warrants an extension of this housing boom, that the aging demographic profile will force us to open up the borders to even more immigration and that the housing bubble has not even started yet.
But not compared to China nor India.
So much for the nearly knowledgable group's side whose focus is not so sharp, whose vision is not so clear, whose horizons are much shorter...
Like, you figure the interest rates will stop at 4%?
On a lighter note, "ARMs Coming Due" might suggest body parts (to a surgeon), and perhaps a reminder of promised donations for those with arms to spare. Or maybe promised donations to those who are an arm or two short. The real arms business.
Those ARMS are going to put a lot of people in dire straits.
Cole @ The Boy in the Big Housing Bubble
Well all I can say is those who live by the sword will die by the sword.
good job cr. I just opened you up to link to the data-loaded cnn story. Keep up the good work.
ARMs are adjusting upward adding hundred to bills. - Nov. 18, 2005
This is the main argument for a 2007 housing crash. This will probably bring the whole economy down as well. The home ATM machine will certainly be closed when the ARMs start adjusting.
Of course everyone could just get Option ARMs and make minimum payments.
HELOCs came along and provided not only an extra puff for housing but also the economy. So it is possible that some new financial instrument could be invented to keep us going. [Securitize your social security?]
The UK has had a year and a half run without house price escalation, which gives you an idea of the depth of this equity extraction. Hard to imagine how those who don't own houses are doing but the retail side still looks grim, even after a retracing of their prime rate.
I cannot see any reason why we would not follow a similar pattern assuming the exposure from risky loans is approximately the same.
When questioning Indian coworkers' ARMs with "what if you can't trade up or refi after 5 years", one thing that I heard was "I can go back to India". Whether this be true or not, it does not inspire a lot of confidence ...
And BTW nobody please think foreigners leaving the country will mean appreciably more jobs for locals ...
Question for the knowledgeable group.
How is the rollover risk shaping up for 2007?
I worked at Enron and the rollover risk in the commercial paper market was a big part of the vise that squeezed Enron into the disclosures that sank the company.
Can the $1T in mortgages set to recast in 2007 simply refi into another alternative mortgage?
I know higher rates are affecting mortgage rollover risk what else is there?
Thanks.
Our resident experts, (acknowledged by the peer group to be knowledgable) [possibly unlettered, even with questionable experience, but whip smart] are all busy with other callers (putting the finishing touches on the next press release from Fannie) at the moment Aaron.
Tis true about that chunk coming up in 07, but no worries as long as the housing market values continue to be healthy.
Ok, robust.
Alright, booming.
Atleast more booming than say China or India who may be competing for these same funds. There are some who think that we have not overbuilt, that the population growth here warrants an extension of this housing boom, that the aging demographic profile will force us to open up the borders to even more immigration and that the housing bubble has not even started yet.
But not compared to China nor India.
So much for the nearly knowledgable group's side whose focus is not so sharp, whose vision is not so clear, whose horizons are much shorter...
Like, you figure the interest rates will stop at 4%?
Ok Aaron that'll teach you to use that opener " for the knowledgable group", if you want responses from this bashful readership.
On a lighter note, "ARMs Coming Due" might suggest body parts (to a surgeon), and perhaps a reminder of promised donations for those with arms to spare. Or maybe promised donations to those who are an arm or two short. The real arms business.