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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] DELINQUENCIES Posted by Larry Nusbaum on September 21, 2006 at 8:42 PM With home prices set to move even lower as inventory is reduced, and monthly payments set to rise as mortgage rate resets kick in, more and more homeowners are in danger of delinquency, suggesting more widespread foreclosures. As you can see in the chart below, housing affordability has been in a free fall. Delinquencies lag affordability, but note the big subsequent surge in delinquencies after affordability sank in 2000¡V2001. Affordability is much worse today than it was during the last recession, in 2001, while household debt payments have jumped to nearly 14% of disposable income, an all-time record. With home prices and mortgage rates receding, there is hope for a bottom in affordability. But given the lagged effect, a rise in delinquencies may already be baked in the cake. Banks may be at risk as well, as they have become steadily more dependent on residential real estate loans. As seen in the chart above, residential real estate loans as a percentage of total bank loans have surged from about 23% in 1999 to about 31% today. Follow Ups: Re: DELINQUENCIES Bob Smith 3:49 PM, 09/22/06 (2) Banks are not banks anymore Rick, the Probate Guy 8:26 AM, 09/24/06 (1) Re: Banks are not banks anymore Bob Smith 9:17 AM, 09/25/06 (0) Atomic bombs and other tell-tale signs of implosive change Rick, the Probate Guy 9:05 PM, 09/21/06 (0) Post a Followup: Name : E-Mail : Subject : Comments: : With home prices set to move even lower as inventory is reduced, and monthly payments set to rise as mortgage rate resets kick in, more and more homeowners are in danger of delinquency, suggesting more widespread foreclosures. As you can see in the chart below, housing affordability has been in a free fall. : Delinquencies lag affordability, but note the big subsequent surge in delinquencies after affordability sank in 2000¡V2001. Affordability is much worse today than it was during the last recession, in 2001, while household debt payments have jumped to nearly 14% of disposable income, an all-time record. With home prices and mortgage rates receding, there is hope for a bottom in affordability. But given the lagged effect, a rise in delinquencies may already be baked in the cake. : : Banks may be at risk as well, as they have become steadily more dependent on residential real estate loans. As seen in the chart above, residential real estate loans as a percentage of total bank loans have surged from about 23% in 1999 to about 31% today. Optional Link URL: Link Title: Optional Image URL: [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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