US are mortgages defaulting, but what about UK, Spain, ... ?

gnome · Apr 7, 2008

Quote from Jayford:
"... It amazes me that people could be so stupid to purchase an ARM in the first place..." [/B]

Well, dickweed GreenScam was encouraging people to finance with ARMs. But now he's making it a point to claim, "it wasn't MY fault".

Jayford · Apr 7, 2008

Quote from gnome:

Well, dickweed GreenScam was encouraging people to finance with ARMs. But now he's making it a point to claim, "it wasn't MY fault".

I don't care what Greenspan was saying. How could someone purchase a home with an ARM when they knew they could never afford it at a fixed rate? That person obviously doesn't belong in that home. Its just pure gambling, but with a house!

Yes, the FED kept rates too low, and encouraged the activity, but geez! What kind of rational person wouldn't say "what happens if rates go up?"

gnome · Apr 7, 2008

Quote from Jayford:

"... geez! What kind of rational person wouldn't say "what happens if rates go up?"

Well, EVERYONE wanted in on the gravy train of "free money" in RE. Mortgage brokers told borrowers, "don't worry, you can refi in a couple of years and take out some profit, too". Borrowers went, "OK", and there you have it. The Fed and the Gummint were ENCOURAGING what they should have been PROHIBITING. :mad:

amiga · Apr 8, 2008

Seems ARM are the most dangerous form of any interest rate form. In UK there were "discount rates" for few years, what is moreless the same as ARM. Fortunately discount rates it became less popular in recent years. In 2000, 45% of new mortgages were discounted, while in 2007 only 7%. For the old vintages the discount is over, so the risk of these mortgages is not that high now.

But anyway, I am scared of first notice that there could be recession in UK. See end of Bloomberg's message:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aktDymERL_dU&refer=home
According to the file which I attached in my previous post, that would be a CRASH!

Anyone thinks UK is going into recession?

mokwit · Apr 8, 2008

The good news is that maybe people will stop talking about how much their house is worth, how much they paid for it, and therefore what a genius they are. Negative equity shuts them right up.

moo · Apr 8, 2008

Quote from amiga:

So are we gonna see defaulting mortgages in Europe?

Of course we are. Very much so.

All I know is that house prices in both UK and Spain were far higher than in the US. But how much exactly? And how about other European countries? Anyone have data on this?

Jayford · Apr 8, 2008

Quote from gnome:

Well, EVERYONE wanted in on the gravy train of "free money" in RE. Mortgage brokers told borrowers, "don't worry, you can refi in a couple of years and take out some profit, too". Borrowers went, "OK", and there you have it.

I live in in California and I don't have a single friend who bit off more than they could chew, and almost all my friends own their own homes. So no Gnome, not EVERYONE did that. In fact, although the numbers are historically ugly, it is still a small % of overall home owners that got in hot water.

And BTW, mortgage brokers are salesmen. Anyone who believes what they say without it in writing deserves what they get. Personal responsibility is where the buck stops. This is one reason why I am against any government bailout of people who can't make their payments (half of them are in way too much house, and refi'd over and over for the ATM aspect anyway). That and the fact that it won't work. Gotta let the market get to where it belongs.

marky1 · Apr 8, 2008

Spain is in real trouble already.
Certainly along the southern coast the market has ground to a halt - there are a lot of empty houses that developers are trying to shift. Adding to the problem is a weakening sterling, a huge proportion of buyers were from the UK - with the sterling weakening there are few buyers now.

amiga · Apr 8, 2008

Quote from moo:
All I know is that house prices in both UK and Spain were far higher than in the US. But how much exactly? And how about other European countries? Anyone have data on this?

UK:
house price increased to average 213 807 GBP in Dec 2007, what is real increase of value by 144% compared to 1995, when housing market recovered from 90s bubble burst. See e.g. http://www.cml.org.uk/cml/statistics covering 98% of market, or indexes of nationwide, Halifax, ... which cover less of the market.

Spain:
house prices increased by real growth of 118% since 1997 when there was last housing troubles. The data are of worse quality, but some are published by Ministry of Housing http://www.mviv.es/, or National Statistics Institute http://www.ine.es.

Has anybody data on other countries?

amiga · Apr 8, 2008

Quote from marky1:

Spain is in real trouble already.
Certainly along the southern coast the market has ground to a halt - there are a lot of empty houses that developers are trying to shift. Adding to the problem is a weakening sterling, a huge proportion of buyers were from the UK - with the sterling weakening there are few buyers now.

I did a look on statistics from Spanish Ministry of Housing and according to it, only around 2% of housing transactions were done by non-residents/foreigners. Taking account also residents-foreigners, it's around 13% of transactions, what is already quite a lot. Anyway, I suppose the demand in coast was also driven by Spanish dream of having 2nd weekend house. Other provinces had stagnating prices, while coast was steepening. So surely house prices are going to decline, however, that said, it's "only" MtM loss for residents, not realized loss.

Do you think hat people got so indebted, that they are going to fail with their payments ? Spain RMBS market was pretty big and 2007 issuance on record level, so it would mean more writedowns