The Bank for International Settlements issued a warning last week that the Federal Reserve’s monetary policies have created an enormous equity bubble which could lead to another “Great Depression”. The UK Telegraph says that, “The BIS–the ultimate bank of central bankers–pointed to a confluence a worrying signs, citing mass issuance of new-fangled credit instruments, soaring […]

Mortgage rates are leaping as defaults, foreclosures and inventory rise. The economy is starting to hurt.
Over the past five weeks, interest rates for the benchmark 30-year mortgage jumped by more than half a percent, pinching borrowers with both good and bad credit alike. As of June 21, the average rate on a 30-year fixed loan […]

As the Fed does an ostrich impression by sticking its head in the ground and pretending everything is okay, we are facing an economic tipping point ushered in via housing. The Fed has left the key interest rate steady once again. At this point, they are backed to a wall because lowering rates will signal […]

Despite turmoil in the housing markets that includes record foreclosure numbers, mortgage rate increases and home price depreciation, homeowners don’t believe there’s a real estate slump, according to a new poll.
Most - 55 percent - are confident that their homes continued to increase in value compared with a year ago, according to a nationwide telephone […]

With apologies to Homer Simpson’s Jack Nicholson impression, “No free money and no quick flip makes homeowners … something, something …”
“Drop prices?” Don’t mind if they do.
Read Article [offsite]

During the height of the real estate bubble, I wrote a column saying that the crash was coming and suggested selling any piece of real estate that was overpriced, questionable, or non-performing. As expected, I received angry replies.
Today, I’m predicting the next crash, what I believe will cause it, and why it’ll be a severe […]

Mike Larson writes : Just a couple weeks ago, I told you that the bond market had suffered a critical break. Now, we’re seeing Real Estate Investment Trusts (REITs) roll over, too.
The benchmark exchange-traded fund for this sector, the iShares Dow Jones U.S. Real Estate Index Fund (IYR) , just broke through critical technical support. […]

Sales of new homes fell in May for the fourth time in the past five months, providing further evidence of a continued slump in housing.The Commerce Department reported Tuesday that sales of new single-family homes dropped by 1.6 percent last month to a seasonally adjusted annual rate of 915,000 units. That followed a 12.5 percent […]

Sales of existing US homes declined unexpectedly in May, dashing expectations that the struggling real estate market would show an uptick in sales, an industry survey showed Monday.
The National Association of Realtors (NAR) said existing home sales dropped 0.3 percent to an annualized pace of 5.99 million last month.
Read Article [offsite]

Something has got me fretting recently: if house prices do crash, what are the chances it will be even more painful for families than last time round?
The Bank of England predicts that fewer households will suffer negative equity - where your mortgage becomes worth more than your home. But there is another aspect to the […]

The Bank for International Settlements, the world’s most prestigious financial body, has warned that years of loose monetary policy has fuelled a dangerous credit bubble, leaving the global economy more vulnerable to another 1930s-style slump than generally understood.

“Virtually nobody foresaw the Great Depression of the 1930s, or the crises which affected Japan and southeast Asia […]

If you worry that the US Fed might be caught between a rock and a hard place – squeezed between inflation on one side and plunging house prices on the other – then pity the poor central bankers in London and Auckland.
Every time they raise their interest rates, house prices increase!
The Bank of England has […]

RISING house prices have been blamed for forcing many young people who grew up in Wanstead to move away the area.
With two bedroomed flats in parts of the town now costing as much as £350,000, fears have been raised that first-time buyers on average incomes are being increasingly priced out.
James Arben, was born and brought […]

Financial markets represent the collective result of individual actions. To fully understand how our current housing bubble was inflated, one needs to understand how the actions of the individual market participants impacted house prices. In my last analysis post, Yuor buyers Loan Term.
I discussed future interest rates and debt-to-income ratios and their impact on future […]

Markets operate under the assumption that key players act rationally in most circumstances. Their premise is such that market stability is based on people acting to a set of according rules. Much has been debated about this because economics as a science is cold and aloof; it is a matter of simply stating the facts. […]

What do Iraq and the U.S. housing market have in common? At first blush, not much. Iraq, which has taken the lives of thousands and ruined America’s reputation abroad, is far more disastrous than the housing collapse, which has been merely financially devastating.
Read Article [offsite]

WASHINGTON (MarketWatch) — The outlook for U.S. home building is the worst in 16 years, the National Association of Home Builders reported Monday. The builders’ housing market index fell by two points to 28 in June, the lowest since February 1991.
The market probably won’t turn around until next year, said David Seiders, chief economist for […]

hen 2008 rolls around and the U.S. economy is sinking with frightening momentum into a bottomless quagmire, you’ll be glad you read this entry. Why? Because you anticipated every step of the implosion and warned your friends who were still floating complacently down that river in Egypt (de-nial).
In keeping with our theme of context, let’s […]

David Budworth at The Times expands on the data from the CML today to suggest that young first time buyers hoping for a housing crash will be left disappointed…
Not only are first-time buyers paying 19 per cent of their income in mortgage interest - the highest level for 15 years - but more than half […]

In polite circles there is one C-word that remains taboo. Crash. We can whisper it or think it, but anyone saying it aloud faces ostracism from our property-obsessed culture.
We may have to overcome our objections. House price inflation is cooling in England and Wales – but still rising in Scotland and Northern Ireland, although for […]

Families are facing the worst mortgage squeeze since the tail-end of the last house price crash, new figures show.
Home loans are consuming the biggest portion of household incomes since 1992, sparking fears that the housing market is heading towards a full-blown slump.
The news came hours after Mervyn King, the governor of the Bank of England, […]

The sharp increase in long-term U.S. interest rates that has occurred in the past week means trouble ahead for the already depressed U.S. housing market, according to the American Bankers Association. VOA’s Barry Wood reports on the implications of long-term interest rates reaching a five-year high of over five percent.
The bankers’ association predicts overall growth […]

“Just sitting here watching the wheels go round and round…”
Mondo Money keeps spinning and turning.
In the West at least, “them that has, gits.” Lehman (NYSE:LEH) announced that its profits are up 27% in the last quarter. The whole financial industry is enjoying its moment of glory. No business is more profitable. And no business is […]

Household finances in British homes are at breaking point. With virtually no safety margin in the average household budget, a further rise in interest rates could tip many homeowners over the edge, according to a study by personal finance website Fool.co.uk .
Currently, the gross income of the average household in the UK is £32,800 (1). […]

Would-be home buyers, such as James Aberle, have watched with angst as mortgage rates have jumped nearly 10% in just five weeks. The average rate on a 30-year fixed mortgage hit 6.74% this week, Freddie Mac said Thursday, its highest in nearly a year.
The spike in rates — which averaged just 6.15% in mid-May — […]

Families are facing the worst mortgage squeeze since the tail-end of the last house price crash, new figures show.
Home loans are consuming the biggest portion of household incomes since 1992, sparking fears that the housing market is heading towards a full-blown slump.
Read Article [offsite]

Rate on 30-year fixed mortgage climbed to to 6.74% in past week, highest level since July 2006.
Mortgage rates made their largest upward movement in nearly 4 years, and the 30-year fixed-rate reached its highest level since July 2006, Freddie Mac said Thursday.
The average rate on 30-year fixed-rate loans climbed to 6.74 percent for the week […]