Click on this link to hear about mortgage defaults for Katrina survivors.
Imagine being expected to pay on a mortgage when the house isn't even there anymore! Econo-Girl wouldn't.
What would the structural issues be for the mortgage market with all of these defaults? Econo-Girl thinks that it will make mortgage rates even higher and getting a mortgage will be harder.
No less than Alan Greenspan has warned Fannie Mae that it is overextended in providing mortgages, and he said there is considerable risk right now to the entire mortgage system because of it. One of the risks Greenspan warned about was a larger number of defaults.
Econo-Girl and Leisure Lad are trying to sell his coop in DC. My goodness, the prices have gone down. And it takes longer to sell something.
The upshot of all this information is that Econo-Girl sees long term mortgage rates rising rapidly in the next six months. By mid-summer of 2006, we will be wistfully recalling the rates of 2005.