For those who keep asking about a market bottom, Paul Kedrosky wonders aloud about whether the worst is past.
The lack of systematic, government-mandated and collected statistics on the structure of the mortgage loan market appears to be a running theme in how the uncertainty keeps going, and going, and going. (There may be some that I just do not know about).
Among the things I haven't seen systematically outlined:
- How many sub-primes have been re-financed into primes, and who were the companies that originated those loans
- How many loans, of all types, have pre-payment penalties, and who were the companies that originated those loans
- How many ARMs, by class/type, are pay-option arms, and who were the companies that originated those loans
- How many loans had mortgage insurance paid for by financing and who were the companies that originated those loans
- How many IO's have terms greater than 30 years, and who were the companies that originated those loans
- For a variety of cross-sections, what are the summary statistics for the "margin" required? How many have a margin so high, on re-set or otherwise, that the "normal economics" of the loan are "gotcha", i.e. as time passes, the chances are great that indebtedness (total due) will increase, perhaps even if rates fall?
For those reading comments to PK's post, without knowing the array of mortgage market products (I certainly do not), here are some jargon qualifiers:
On the other hand, the 1-yr ARMs rates for new mortgages are surveyed at over 5% and 5/1 ARMs higher still. It looks like 1-yrs bottomed out at 4% when Greenspan took policy rates as low as they are today.
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