Just about a year ago I lamented the growth in interest-only and other 21st century mortgages. Today's Wall Street Journal reports that 29% of those who took out a mortgage in 2005 have been able to amass zero or negative equity in their home. In 2004 10% of new mortgages were in the same boat. Bear Stearns reports a similar story on the 2005 mortgage class; many more - anywhere from a third to double - were in trouble than those who matriculated in previous years.
The mortgagors seemingly have not learned that eventually they will pay the price for lending to those who should not be borrowing. About 10% of mortage lenders have lowered their standards even more in 2006.
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