“However, most subprime borrowers are already financially stretched even without higher monthly payments. This financial overburdening may mean that the continuing falls in house prices prompts borrowers to wonder whether the sacrifices of paying towards a depreciating investment is economically sensible. Given that it is almost certainly cheaper to rent an equivalent property and that subprime borrowers are unlikely to be losing much in the way of credit score from a default, it is increasingly difficult to see how ‘transaction costs’ can provide much of an argument against defaulting.â€
As a result we believe negative equity is playing a progressively more important roll in determining whether borrowers are defaulting.
Other related blog posts:
Negative equity casualties – Las Vegas Sun – Adjustable rate mortgages and investors counting on appreciation fueled Nevada’s rise to its spot as the foreclosure capital of the country the past two years. By the time the final 2008 statistics are calculated, …
Negative equity increasing in Grand Junction housing market – 1/1 … – Negative equity increasing in Grand Junction housing market By Anna Maria Basquez – GJ Sentinel – Thursday, January 01, 2009 The number of homes in Grand.
Research Recap » Blog Archive » What Lies Behind Higher US … – Author Luci Ellis of the Reserve bank of Australia writes that the relationships between the characteristics of mortgages and the incidence of negative equity in a housing bust help explain why US households have fallen …
The BUYER must share some responsibility! I’ve made bad investments in life and always had to admit and suffer the loss. Aren’t there consequences anymore?
San Diego Clinical Research
Just get it over and done with, a recession is required to weed out the crap in the market.
The UK & the US both need a hard landing. Bring it on!!
San Diego Bail Bondsman
I believe a lot of people who purchased with subprime loans and were not really qualified have to accept the inevitable consequences and perhaps build up their savings and credit while renting until the next purchase opportunity.
San Diego Dentist