Thursday, July 5, 2007

Defaults To Keep Rising As Consumers Struggle With Debt

Bloomberg: “Delinquencies and defaults on U.S. subprime mortgages will keep rising as problems in the housing market persist, said Robert Parker, vice chairman of Credit Suisse Asset Management.”

“The share of U.S. subprime mortgages entering default in the first quarter was the highest in almost five years, according to the U.S. Mortgage Bankers Association, as the country suffers its worst house-price decline since the 1930s.”

“‘It's naïve to assume the worst is past us in the U.S. subprime market,’ Parker said at a bond market conference today in Hong Kong. ‘At least over the balance of this year, the subprime default rate will rise.’” read more >>

MarketWatch: The signs of stress are all around:
“Prices are rising, but incomes and wealth aren't. With most households already overburdened with debt, consumers are being squeezed. There's only one thing to do, even though it goes against every fiber of their being: Cut back on expenses.

“Realtors are feeling it, retailers are feeling it, and so are automakers and bankers.”

- Sales at retail chain stores continued to weaken in the last week of June. The International Council of Shopping Centers index barely grew week-over-week, while the Redbook index fell to a cyclical low, with same-store sales up just 1.2% compared with a year earlier.
- Vehicle sales declined for the sixth straight month in June. In the past six years, sales have been weaker on only two occasions. At the same time, the automakers have stepped up their production, setting up the industry for another round of layoffs and production cutbacks.
- Home sales fell again in May. The National Association of Realtors said the number of contracts signed on previously owned homes fell 3.5% to the lowest level since the recession.
- More consumers fell behind on their debt payments in the first quarter. The percentage of loans that were 30-days past due rose to the highest level since the recession of 2001. read more >>


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