Much has been written in recent months about as bad as the subprime problem looks at the moment, what with rising defaults, it will only get worse. That’s because the peak for “resets” of all those subprime mortgages with initial teaser rates as low as 1%, but destined to rise to 7%, 8%, 9% or higher doesn’t occur until later this year. The peak months for subprime resets will be between December and February.
That’s true, and the inference is that if we can ride out the next four or five months, then we’ve survived the worst and hopefully housing prices will start to stabilize.
Sorry. The International Monetary Fund just released a report on the global outlook and it included a chart produced by researchers at Credit Suisse that takes a broader look at ALL forms of adjustable or “resettable” mortgages. And the picture ain’t pretty. All combined, we’re looking at another four years of mortgage resets, which means another four years of hard road for the housing market.