Today’s subprime mortgage moment is brought to you by Thomas Hilchey and Robin Crevier, who have turned their borrowing woes into media gold, with a local story in the Globe and another one syndicated world-wide by Reuters.
Meanwhile, The Wall Street Journal surveyed sixty economists to find out their opinions on the effect of the subprime loan crisis.
Most economic forecasters in a new WSJ.com survey believe recent turmoil in the subprime mortgage market is likely to spread to the broader mortgage market and they expect a widely followed index of home prices to fall this year.
But they still think the U.S. will avoid a recession and even a significant rise in unemployment.
“The markets may have over-reacted,” said John Lonski of Moody’s Investors Service. “Only businesses significantly exposed to subprime will be hurt. Mortgage repayment problems aren’t as widespread as we are led to believe. If most people were having trouble paying the mortgage, it would lead to declining consumer confidence and we haven’t seen that.”
Of the 60 economists surveyed, 32 said it is either “very” or “somewhat” likely that the intense and speedy unraveling of the market for subprime mortgages — home loans made to people with poor credit histories – will spill over to the rest of the mortgage market.
But 26 said that’s not likely. Two didn’t respond.
In my opinion, it’s a little premature to come to any educated conclusions, but you can’t stop the press (apparently).
The economists seem much more concerned about rising inflation and whether the Fed will do enough to protect our economy than any subprime lending problems.
Source: Subprime Mortgage Woes Spread; Forecasts for Home Prices Cut – By Phil Izzo, The Wall Street Journal
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