Wednesday, August 12, 2009

Half of American mortgage holders to be underwater by 2011

Interesting report out from Karen Weaver, Deutsche Bank, arguing that the percentage of owners with negative equity would double by 2011. Most of the information should be familiar to the readers.

The next leg? The percentage of conforming borrowers with negative equity is expected to go up by more than 250%. Karen predicts 41% conforming borrowers to have negative equity in 2011 compared to 16% in the first quarter. The numbers for prime jumbo go to 46% from 29% currently.

Read more here, or watch the CNBC interview by clicking on the image below.

Just a note that CNBC incorrectly highlights that half of American homeowners would be underwater in 2011. Bubblevision for a change decides to be uber bearish! It’s not half of American homeowners, but half of American mortgage holders who would be underwater. This is of course all dependent on job losses. If job losses do not peak at 10% but keep heading up, this thing is going to get a lot worse. Which is why jobs are a leading indicator in this whole thing.

Negative equity. Underwater mortgages. Drowning homeowners. Maybe time for a few swimming lessons!


FT Alphaville
Deutsche Bank on those drowning US homeowners

Drowning in Debt

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