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WARNING The US And UK Housing Collapse Round Two is Inevitable
By The Anglo American | September 19, 2009
A new US and UK Housing Collapse is Inevitable.
Although there appears to be some stability in the housing markets on both sides of the Atlantic, is this the calm before a colossal storm?
Britain is about to have its own sub-prime crisis. As with the US, being vertical was a sufficient qualification for what is known as a “buy to lie” mortgages. These are self-certifying mortgages - where there are no background checks on earnings.
One Third of these mortgages are more than 90 days past due.
In the US the focus has been on the mortgage “cure rate” where home owners with mortgages past due catch up with their payments.
Fitch Ratings research has shown that between 2000 and 2006 over 45% of prime loans that went delinquent were fixing themselves In other words, the cure rate was 45%. Even sub-prime mortgages had a cure rate of 19.4 %.
But in 2009 the prime cure rates have fallen off a cliff. Only 6.6% of prime mortgages are curing themselves. This is hardly any better than the 2009 sub-prime cure rate of 5.3%.
Over 50% of all US foreclosures are on prime mortgages.
US prime mortgages tend to be much lager than their sub-prime counterparts. The market is valued around $11 trillion. If several trillion dollars were lost to foreclosure the consequences for fragile banks looks bleak.
The US government is so heavily committed to debt that world markets are questioning the viability of the dollar. The currency is likely to buckle if the printing presses spew yet more dollars with questionable collateral behind them.
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