Published on Mon, Oct 23, 2006 at 13:31 | Source : Moneycontrol.com
Updated at Wed, Oct 25, 2006 at 18:12
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US housing market slowing?
According to traders of mortgage-backed securities, the slumping US housing market is about to get a lot worse, reports CNBC-TV18. Traders expect mortgage delinquencies and foreclosures to rise significantly.
According to traders of mortgage-backed securities, the slumping US housing market is about to get a lot worse, reports CNBC-TV18. Traders expect mortgage delinquencies and foreclosures to rise significantly.
Reports suggest that the slump in the US housing market is about to get worse. The ABX Index measures the risk of owning bonds backed by home-loans. The ABX Index rose 30% since August 9, to its highest since January. There are more than USD 500 billion of such notes outstanding.
Sales of new and existing homes are seen down 9.4% in 2006. The housing slowdown may cause Fed to lower rates to 4.5%.
Traders expect mortgage delinquencies and foreclosures to increase. The amount of bonds backed by subprime loans have more than doubled since 2001. More borrowers are finding it more hard to meet interest payments.
Home loan payments of more than 60 days overdue have risen to 7.23% in July. The default rate for subprime loans has risen to 7.35% in July from 5.51% (YoY).
Sales of new and existing homes are seen down 9.4% in 2006. The housing slowdown may cause Fed to lower rates to 4.5%.
