Interest Rate Roundup

Thursday, November 29, 2007

Some stories to ponder on this busy day

I apologize for not keeping up with some of the latest developments here, but I have been busy, busy, busy today. So I'm going to keep this short ...

* Foreclosures are continuing to rise sharply from year-ago levels, according to RealtyTrac. As this story notes, they were almost double the level of October 2006 last month. Part of the problem is ARM resets. Part of the problem is that people just bought more house than they could afford.

Still another contributing factor: Declining collateral values. Price declines are both deeper and more widespread now than they've been in a long time. That means more borrowers who fall behind on payments are also finding themselves upside down -- owing more than their homes are worth. Sometimes the best of bad options is just to walk away, and more delinquent borrowers appear to be doing so now.

* The stock market is saying "All is well." The bond market is shouting "Fire" in a crowded theatre. So-called TED spreads are blowing out, LIBOR rates are soaring, and so on and so forth. If you wouldn't know a TED spread from a Bill & Ted's Excellent Adventure DVD, then read this piece. It'll catch you up on why this matters.

* And don't forget about the economy. The overall U.S. economy had been chugging along earlier this year despite the housing sector's "private recession." But times they may be a-changing. The Beige Book I discussed yesterday was chock full of crummy news. Then today, we learned that jobless claims are starting to break out to the upside.

Something to ponder: If foreclosures were already surging in an economy growing at 4.9% and unemployment low, what's going to happen now that growth is slowing and layoffs are on the rise?


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