12% of all American homeowners with a mortgage are behind on their payments or in foreclosure. Half of all adjustable-rate loans to borrowers with a weak credit record were past due or in foreclosure and we still have tons more option ARM mortgages which will switch to new rates in the coming months.
New home sales rise, but the Administration is revising the prior month substantially, hoping the market wouldn’t see it.
Why is homebuilder confidence climbing to an eight-month high?
With mortgage rates at pre-QE levels.
Rates are rushing higher, so it is clear that the FED will come out very soon with a QE v.2.
Consider this:
There are 80 million US houses.
New home sales rise, but the Administration is revising the prior month substantially, hoping the market wouldn’t see it.
Why is homebuilder confidence climbing to an eight-month high?
With mortgage rates at pre-QE levels.
Rates are rushing higher, so it is clear that the FED will come out very soon with a QE v.2.
Consider this:
There are 80 million US houses.
53 million have mortgages.
27 million are paid off.
48 million are paying in time.
5 million are behind (9,5% of 53 million with 2.8% in foreclosure)
In the 1930's 50% were seriously delinquent.(Data: US Treasury, Milken Institute)
But also Europe is not going to escape. From John Mauldin:
The value of outstanding loans to Spanish developers has gone from just €33.5 billion in 2000 to €318 billion in 2008, a rise of 850% in 8 years. If you add in construction sector debts, the overall value of outstanding loans to developers and construction companies rises to €470 billion. That's almost 50% of Spanish GDP. Most of these loans will go bad.
But also Europe is not going to escape. From John Mauldin:
The value of outstanding loans to Spanish developers has gone from just €33.5 billion in 2000 to €318 billion in 2008, a rise of 850% in 8 years. If you add in construction sector debts, the overall value of outstanding loans to developers and construction companies rises to €470 billion. That's almost 50% of Spanish GDP. Most of these loans will go bad.
"Spanish banks are now facing a very bleak outlook. Spain's unemployment rate reached over 17% last month; there are now four million unemployed Spaniards and over one million families with not a single person employed in the family. Spain and Ireland had the worst housing bubbles in the world and now Spain has as many unsold homes as the US, even though the US is about six times bigger.
"Why are Spanish banks not insolvent? Spanish banks are not marking their real estate loans to market. We've often wondered how it is that our thesis for Spanish real estate and industrial collapse has not created more victims. The answer is simple according to an article in Expansion, the Spanish equivalent of the Financial Times, from the 19th of April titled 'Spanish banks control half of all real estate appraisals.' You can't make this stuff up. We haven’t even begun to see the worst in Spain yet."
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