More Fed Speak 05/17/07
More Fed Speak from Bennie & the Feds: remember the great Bennie has spoken... and signs of stabilization have appeared...
"we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited."
"we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system."
out the other side of the mouth... "the cooling of the housing market is an important source of this slowdown (GDP & economic)".
"a significant share of new loans used to purchase homes in 2005 were nonprime... The rise in subprime mortgage lending likely boosted home sales somewhat..."
Sub prime accounts for 14% on all 1st Mortgages; Alt-A accounts for 10%; add em up you get around 25% of all 1st liens potentially at risk.
"curbs on subprime lending "are expected to be a source of some restraint on home purchases and residential investment in coming quarters."
More downside to come? "We are likely to see further increases in delinquencies and foreclosures this year and next as many adjustable-rate loans face interest-rate resets."
"given the fundamental factors in place that should support the demand for housing....
"house prices have decelerated, even falling in some markets... interest rates on both fixed- and adjustable-rate mortgage loans moved upward,
Some subprime borrowers... (who counted on refinancing at higher prices) may not have had enough home equity to qualify for a new loan given the sluggishness in house prices.
some owners with little equity may have walked away from their properties, especially owner-investors who do not occupy the home and thus have little attachment to it beyond purely financial considerations.
the inventory of unsold homes has risen substantially, and single-family housing starts have fallen by roughly one-third since the beginning of 2006."
The Nattering One concurs that there are some really great fundamentals in place to support demand... lowered demand that is.
"we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited."
"we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system."
out the other side of the mouth... "the cooling of the housing market is an important source of this slowdown (GDP & economic)".
"a significant share of new loans used to purchase homes in 2005 were nonprime... The rise in subprime mortgage lending likely boosted home sales somewhat..."
Sub prime accounts for 14% on all 1st Mortgages; Alt-A accounts for 10%; add em up you get around 25% of all 1st liens potentially at risk.
"curbs on subprime lending "are expected to be a source of some restraint on home purchases and residential investment in coming quarters."
More downside to come? "We are likely to see further increases in delinquencies and foreclosures this year and next as many adjustable-rate loans face interest-rate resets."
"given the fundamental factors in place that should support the demand for housing....
"house prices have decelerated, even falling in some markets... interest rates on both fixed- and adjustable-rate mortgage loans moved upward,
Some subprime borrowers... (who counted on refinancing at higher prices) may not have had enough home equity to qualify for a new loan given the sluggishness in house prices.
some owners with little equity may have walked away from their properties, especially owner-investors who do not occupy the home and thus have little attachment to it beyond purely financial considerations.
the inventory of unsold homes has risen substantially, and single-family housing starts have fallen by roughly one-third since the beginning of 2006."
The Nattering One concurs that there are some really great fundamentals in place to support demand... lowered demand that is.
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