February 26, 2006

Housing bomb


tick... tick... tick...


Starting this year and picking up speed in 2007, as much as $2.5 trillion of non-conventional mortgage debt is scheduled to be repriced. Millions of Americans will soon face significantly higher mortgage payments. Unfortunately, many can barely afford their current payment.

Why is this happening? What will be the consequences?

In a bid to keep business booming, banks and mortgage lenders in recent years have found “creative” ways to make home loans more affordable—even to people with spotty credit histories or weak credit. By issuing “hybrid” mortgages that typically have low interest rates in the first two years, lenders have been able to entice otherwise unqualified buyers into buying a home. However, the initial low “teaser” rates must eventually be adjusted to the fully indexed level of whatever index is specified in the loan agreement. These adjustments are coming due in a big way, this year and next. That means mortgage payments are set to climb hundreds of dollars a month for a substantial number of Americans!

29 comments:

Anonymous said...

Our new mortgage payment due Feb. just went up $700 a month, (thanks to higher tax assesment this past year). New bill, higher payment, no warning... this is on a 30 year fixed mortgage! I can't imagine having an adjustable rate!

keith said...

banker - do not spam this site with the same post on every thread

you are not welcome here if you spam

the_banker said...
This comment has been removed by a blog administrator.
the_banker said...

(Koward - I'll stop re-posting if you allow ONE response to be printed without deletion......If you delete, then I repost......pretty simple)

Keith - I still read your blog from time to time, but honestly not as much as I used to for the following reasons:

- Much of your discussions since the new year seem to be more “political musings” rather than your usual subjective thoughts on housing……..if I wanted to talk about politics I’ll go across the street and talk to Bloomberg. (what possible reason could you have for putting the Dutch cartoon on your housing blog.......it came off as a shameless outreach for publicity).

- With all your talk about politics and world events, you have shied away from making bold predictions about the stock market, and therefore have not given me many stock tips as of late. The last one I used was your Dow prediction of 8800 by the end of the year…..betting against you is making me money.

- The stock picks you asked us to track last year are not losing as much money as they used to……the Keith index is up an annualized 0.5% since inception…..I am going to have to rely on the Dow and S&P (both up annualized 7.8% since we started tracking the Keith index) to boost my returns. Of your stock picks, three are down, and two are up…..I’ll give you credit for the improvement since there was a time when you were down in all five. Here are the stock picks so that your readers can check for themselves:

Since 11/23/05:
$5000 - 4% interest savings at HSBC
$1000 - short FNM
$1000 - short TOL
$1000 - short TGIC
$1000 - short SPF
$1000 - long COP

- Lastly, you were making a habit of deleting some of my postings (when you were 0 for 5). Are you really that sensitive? Do your readers know that you selectively delete comments from readers whose comments hurt your feelings? You are free to moderate the content of your blog, however I think restricting comments hurts the “credibility” of the “leading bubble blog” . Why should I waste my time posting a comment if it is going to be deleted?

All of the above made checking and reading your blog kind of boring for me.

(HP readers – I hope you are able to read this before Keith Koward deletes this.......sometimes as a last resort Keith changes the blog settings so that only “Blog Team Members” could post…….what a Koward)

277.18 Hz said...

Banker,

I think he's just trying to keep the quality high. Your posts sound like they are coming from a raving lunatic. Maybe it's time for you to give it a rest.

Anonymous said...

banker - the only reason anyone visits this blog is because we all know there is a housing bubble and the economy is in trouble. We all want honset feedback. Most of us will make our own choices, good or bad, this isn't a psychic hotline...but it is a great place to get information from people who have nothing to gain or sell, but are watching the local markets.

Anonymous said...

Banker, open up your own blog and if We want your advice we'll go to it.
your acting like a ten year old girl!

Anonymous said...

banker,

suck it up!

Anonymous said...

let the banker post once without being censored. I feel sure most readers of this blog agree. If he is wrong and Keith is right, time will show it. Censoring legitimate criticism is perverse and a violation of the blogging culture.

IMO the banker and Keith can both turn the temperature down a few degrees and let there be a good debate. All of the housing bubble blogs could use a little of the anti-bubble arguments, which are scarce (and probably likely to get scarcer IMO).

Anonymous said...

Banker
go f$%k youself and buy some investment property. The best place would be Cali or maybe Phx, AZ. Wish could hear the sound of the baseball hiting your skull. Is not even hollow. Is muffed by the shit floating inside.

the thinker said...

Hey Banker, I think the cartoon is DANISH not DUTCH. Go as Bloomberg.

Anonymous said...

let the banker speak......he gives this blog good publicity though his rants are a little misguided....the blog author shouldn't delete posts anyway (unless there is profanity or racist slurs)

keith said...

the banker and all trolls are welcome and encouraged

however, any dolt who spams this site with the same post on every thread will get it deleted everytime. viagra ads, realtor sites, and the banker's spam included

Joe Zychik said...

I think the banker's post was a thoughtful comment that I don't agree with. I welcome him back. I want my beliefs challenged.

This blog is a challenge to the dominant belief system in the economy today. Ban the banker, might as well ban the blog.

Keep the criticisms coming banker. I want to hear from you. You make me think, so far.

If you become a broken record, I'll pass you by.

Best way to fight a bad idea is with a better one.

PS: Name calling is boring. Stick to the facts, banker.

41cadillac said...

These statistics for inflation are crazy.

First the increase in the prices of houses is taken out.

Then the price of Food is taken out.

Then the price of oil and gas is taken out.

So now is the core inflation rate.

I think Ben will raise interests rates like Volker did. No matter what you call it. Higher prices is inflation. Too much money is floating around with no productivity. There you have it. doremefas

Anonymous said...

banker sounds like a 2 year old who lives a, "as long as it don't involve me the world can colapse around me"

I personaly like the varity keep up the good work, banker go count some money and just leave.

devestment said...

Why should I be afraid? Just because I lost my home in 1991 to high unemployment, government budget cuts, and the big walk away from the speculative real estate market?

I will never recover from that. I will never trust another realtor or investment banker.

I work for my money.

BANKER,In all sincerity you may want to run like heck. I think stocks are going up for the next 10 years just as in the previous Real Estate bubble.
The money will need to go somwhere


OUCH!
Our new mortgage payment due Feb. just went up $700 a month, I dont know about you all but this would put a crimp in my style. If my earning power recesses I am in trouble!

Anonymous said...

I like the banker, he rocks. We all know you all are bitter, missed the boat, liberal, socialist chumps. It does sound like a broken record. You all sit and tell each other the same facts over and over again. You are all desperate to call a top. You can smell how desperate and angry you all are. Dont trade angry. Keith seems to have a mean spirited tone as well, with his bitterness towards anyone who made some $ in this run. I also say this even though I agree with many points that Keith and others have.

confused said...

going mad with all this!! Yes, I was one of the people who "lost out" on the boom (Miami Beach of all places!!),saw it happening and "sat" on my money with a good CD before 9/11 when prices were great!! ($120.000.00 for a 2 bedroom condo, in a not so nice bld).After 9/11 hubby lost job and I became too absorbed in my job and insecurities and ...did not buy.
I am sitting again on my cash ( in CD)and am one of "those" who hopes prices will go down... At least to the Jan 2004 level.
Here is my point, I know in Miami and other HOT cities there are a lot of speculators who drove prices up... on the other hand those who bought a few years back can simply sell their homes at a much higher rate and buy another home also at a much higher rate. I think it is mostly the "first time buyers" or those, like myself , who bought, and sold years ago and did not re-buy.
It is very confusing..
As for inflation, I've been buying most of the same items-brands for years. Bread from $1,59 - $1,79,milk went up with 30 ct even something as little as a single donut from 49 ct to 59 ct. Rents are up, gas is up, taxes ( we pay 2.57%property tax here outrages!!) up ( oh and according to the city of Miami this is already spent on pensions for county workers...).
Movies up, food in my favorite restaurant .up. Yes, i do feel very often that I missed the boat and have been very angry with myself...

Am still waiting to buy now.

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