Suboptimal Outlook for Subprime Loans
Next year could be a tough one in the subprime mortgage area, warns Fitch Ratings. The investment research firm is predicting that the higher rate loans will experience a 10 to 15 percent rise in delinquencies in 2006, as the poorer people who typically take such loans are hit with a triple whammy of higher…
Next year could be a tough one in the subprime mortgage area, warns Fitch Ratings. The investment research firm is predicting that the higher rate loans will experience a 10 to 15 percent rise in delinquencies in 2006, as the poorer people who typically take such loans are hit with a triple whammy of higher debt, higher energy costs and flattening home prices. Roughly 19 percent of all home loans are subprime, up from 5 percent in the mid-1990s. Bigger problems could be around the corner in 2007 when many of the adjustable rates will reset.
Mortgage Stress Seen for ’06 [Washington Post]
It stinks, because you know all those people bought into the boom dream of home ownership and felt like they had to buy when they really couldn’t afford it. They’ll end up in a worse place then they would have been had they kept renting. I’m not saying they didn’t make their own decisions or that someone else is to blame, but it seems that it will have a very polarizing effect between the rich and the poor and just make that distinction all the worse.