Investment Week (August 4)
“The outlook for the UK equity market feels particularly depressed and it is not hard to see why. Even after June’s better-than-expected inflation figures, core UK inflation remains high, which suggests higher interest rates for longer. Commentators are expecting that the base rate, which at 5.25% is at its highest for over 15 years, is likely to peak around 5.75%. This would bring even more pain for mortgage borrowers and greater government borrowing costs to an already faltering economy.”
Tags: 5.25%, 5.75%, Base rate, Borrowers, Depressed, Equity market, Inflation, Interest rates, Mortgage, Outlook, Pain, Peak, UK
CNN (September 29)
“Mortgage rates surged for the sixth week in a row, moving closer to 7%. The 30-year fixed-rate mortgage averaged 6.70% in the week ending September 29, up from 6.29% the week before…. That’s the highest level since July 2007.” Amid soaring inflation and aggressive moves by the Fed, “mortgage rates have more than doubled since the start of this year.”
Tags: 30-year, 7%, Aggressive, Doubled, Fed, Fixed-rate, Highest, Inflation, Mortgage, Rates, Surged
Financial Times (August 22)
“China has slashed its mortgage lending rate for the second time this year as the country’s central bank seeks to limit the fallout from a liquidity crisis in the property sector.” While this may “reduce borrowing costs on new mortgages nationwide and provide a boost to the country’s debt-laden real estate sector,” it is unlikely to fix the “crisis of confidence faced by Chinese developers.”
Tags: Borrowing costs, Central bank, China, Crisis of confidence, Debt-laden, Fallout, Lending rate, Liquidity crisis, Mortgage, Property sector, Real estate, Slashed
Bloomberg (August 19)
“The US mortgage industry is seeing its first lenders go out of business after a sudden spike in lending rates, and the wave of failures that’s coming could be the worst since the housing bubble burst about 15 years ago.” Though a “systemic meltdown” is not expected, market watchers still anticipate “a string of bankruptcies broad enough to trigger a spike in layoffs in an industry that employs hundreds of thousands of workers, and potentially an increase in some lending rates.”
Tags: Bankruptcies, Failures, Housing bubble, Industry, Layoffs, Lenders, Market, Mortgage, Rates, Spike, Systemic meltdown, U.S.
Reuters (May 14)
Banks mainly seem to be provisioning for consumer debt, but “bad-debt risks could easily spread beyond consumer finance. Commercial real estate could face a brutal reckoning if white-collar workers in major cities decide not to return to the office when lockdowns lift.” When stimulus measures wind down, it will leave “over-indebted small and medium-sized enterprises vulnerable. Mass unemployment would lead to increased mortgage defaults.”
Tags: Bad debt, Banks, Commercial real estate, Consumer finance, Lockdowns, Mortgage, Office, Over-indebted, Provisioning, Risks, SMEs, Stimulus, Unemployment, Vulnerable, White collar, Workers
Bloomberg (September 23)
Even though the Federal Reserve has kept interest rates low in an attempt to reduce strain on the housing market, the number of households speding an excessive amount on mortage payements has continued to rise. This “persistent stress in housing” illustrates “one of the main problems with the Fed’s attempts at monetary stimulus: Many borrowers simply can’t take advantage of lower mortgage rates, because their income has fallen, they owe more than their homes are worth, or they shouldn’t have qualified for a mortgage in the first place.”Even though the Federal Reserve has kept interest rates low in an attempt to reduce strain on the housing market, the number of households speding an excessive amount on mortage payements has continued to rise. This “persistent stress in housing” illustrates “one of the main problems with the Fed’s attempts at monetary stimulus: Many borrowers simply can’t take advantage of lower mortgage rates, because their income has fallen, they owe more than their homes are worth, or they shouldn’t have qualified for a mortgage in the first place.”
New York Times (August 25)
President Obama should push to see that underwater homeowners, whose home values are less than the balance of their loans, are able to refinance their mortgages at lower rates. There will be opposition, but “the public benefit from fewer defaults and foreclosures—along with the impact of more consumer spending—should trump any benefit derived from squeezing every last penny of interest from homeowners.”
Tags: Consumer spending, Economy, Homeowners, Mortgage, Obama, U.S.
