Forum Archive Index - February 2004

["Allan Potts" <ajp7079@excite.com>]

Bill,

Unfortunately, the word "trend" should have been replaced with "avalanche" or 
alternatively "tidal wave".

Sadly, it is my forecast that within the next 18 months the rate of 
foreclosures in the U.S. will reach those ominous descriptions.

It doesn't take a degree in economics from Harvard to figure this out.  Sadly, 
too many Americans are drowning in debt, yet continue to borrow on the equity 
in their residences, run up credit card debt and buy new cars.  When interest 
rates start to rise, and they will, as we say here -- "Katy bar the door". 

It will take about four to five months after the second rate hike to put a 
large percentage of the population in the bankruptcy courts.  Many people now 
have 0% interest rates on their maxed out credit cards.  When the "free ride" 
period is over the rates go to 7.5% to the most credit worthy people (who 
normally do not max out their credit cards anyway) to more like 12.99% up to 22 
to 23% for the least credit worthy that still can get credit cards.  Add to 
these rates 1 to 3% and variable mortgage rates increasing at the same time and 
you can see what is going to happen.

To make matters worse, the overinflated price of real property will be 
plummeting and many many people will find themselves with a mortgage far 
greater than the value of their property.  As Yogi would say "Deja vu all over 
again".

On that cheerful note, I'll bid all -- a good balance of the weekend.

>From the U.S. Allan 




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