Article on FT - Who is probable to default more even in the Subprime category

harbinger13

http://www.ft.com/cms/s/0/1dbd20ac-6c7b-11dd-96dc-0000779fd18c.html?nclick_check=1

Try this - I dont subscribe to FT.

• FT Home
• > Comment & analysis
• > Analysis

Hard-pressed consumers refuse to read from the script

neverdespairgirl

Your link seems to be subscription-only?

Romani_Ite_Domum

JMTR

apart from messing your credit history for a few years, it’s just a financial decision. Since most people view houses as investments and not really homes anymore I guess this was inevitable.

Generali

If you sign up to the FT (free) you can read a certain number of 'subscription only' articles each day. Some things you still can't read though including the very good and interesting (to me) Lex Column but you can get almost everything else.

WTF?_2

TIP: Use mailinator for the email address if privacy (or spam) issues are a concern.

I always use it for these sorts of things where you need an email to subscribe to a free service.

Generali

Basically, the article says that whereas before, people would pay the mortgage first and everything else second, now there are a lot of people who have put little or no money into their house so can just default with little or no loss.

Also, as many people are using the credit card to pay for essentials such as food they have to pay the credit card bill before the mortgage whereas before they would have done things the other way round.

It's messing with their risk models and making banks' losses even worse.

dopester

!!!!!!? wrote: »

TIP: Use mailinator for the email address if privacy (or spam) issues are a concern.

I always use it for these sorts of things where you need an email to subscribe to a free service.

Thanks. That is cool.

lostinrates

Generali wrote: »

Basically, the article says that whereas before, people would pay the mortgage first and everything else second, now there are a lot of people who have put little or no money into their house so can just default with little or no loss.

Also, as many people are using the credit card to pay for essentials such as food they have to pay the credit card bill before the mortgage whereas before they would have done things the other way round.

It's messing with their risk models and making banks' losses even worse.

Is this relevant to UK market too though?...directly I mean...(only read the unregistered first line:o )

Romani_Ite_Domum

lostinrates wrote: »

Is this relevant to UK market too though?...directly I mean...(only read the unregistered first line:o )

This could be huge for US banks and our banks will feel pain also. The longer the "credit cruch" continues, the worse effect it will have.

lostinrates

Romani_Ite_Domum wrote: »

This could be huge for US banks and our banks will feel pain also. The longer the "credit cruch" continues, the worse effect it will have.

Yes, I understand...vaguely:o , the indirect effect, but I notice that lotsof threads on the main property board are talking about 'handing back the keys' and 'voluntary reposession' recently....which IIRC -and I might not- are NOT options here??

dopester

I used one of my credits for it. Stupid MEW-ers and speculators have near destroyed the entire financial system.

As it isn't right to quote large portions of a subscribed premium article, basically the article discusses the surprise of banks/lenders with jingle-mail, but how people are still servicing credit-card debt as:

“Now, as they are losing value on their homes, they may be less motivated to repay their mortgages. Instead, they will focus on necessities, such as eating or paying for heating fuel. To pay for those, they need to keep their credit cards open. Credit cards have become an essential item for many people.”

How lending rates have gone up despite Fed slashing official rates - just like here, (and the lull here is likely to be short-lived, and wasn't an FTB thing anyway really as conditions already bar most FTBs out)

The accuracy of the models used by the likes of Mr Rosenberger to flag good and bad customers could make a huge difference to the losses that lenders eventually have to absorb – losses that will, in turn, determine the availability of fresh funds for new loans. Caution is already evident: even as official US interest rates have fallen, mortgage rates have risen over the past year.