If you still have equity in your home and have an ARM or a fixed interest rate above 6% now would be a good time to look into refinancing while rates are still in the mid 5’s.
A new report from the analysts over at Deutche Bank predicts home values will drop another 14% in the next 16 months or so and that reported would put nearly half of all US homeowners “underwater” on their homes. Here are some bits from the recent Reuters write up on the subject:
The percentage of U.S. homeowners who owe more than their house is worth will nearly double to 48 percent in 2011 from 26 percent at the end of March, portending another blow to the housing market, Deutsche Bank said on Wednesday.
…
Of prime conforming loans, 41 percent will be “underwater” by the first quarter of 2011, up from 16 percent at the end of the first quarter 2009, it said. Forty-six percent of prime jumbo loans will be larger than their properties’ value, up from 29 percent, it said.
“The impact of this is significant given that these markets have the largest share of the total mortgage market outstanding,” the analysts said. Prime jumbo loans make up 13 percent of the total market.
…
Covering 100 U.S. metropolitan areas, Deutsche Bank in June forecast home prices would fall 14 percent through the first quarter of 2011, for a total drop of 41.7 percent.
The drop in home prices is fueling a vicious cycle of foreclosures as it eliminates homeowner equity and gives borrowers an incentive to walk away from their mortgages. The more severe the negative equity, the more likely are defaults, since many borrowers believe prices will not recover enough.
…
Regions suffering the worst negative equity are areas in California, Florida, Arizona, Nevada, Ohio, Michigan, Illinois, Wisconsin, Massachusetts and West Virginia. Las Vegas and parts of Florida and California will see 90 percent or more of their loans underwater by 2011, it added.
“For many, the home has morphed from piggy bank to albatross,” the analysts said.
August 11th, 2009 at 11:54 pm
[...] Last week we linked to a report that said by 2011 up 50% of American homeowners would owe more on heir homes than the home will be worth. Well today a report from the folks over at Zillow.com estimates that we are already half way there. See this from the Bloomberg article on the subject: Almost one-quarter of U.S. mortgage holders owed more than their homes were worth in the second quarter and that figure may rise to as much as 30 percent by mid-2010 as job losses and foreclosures climb, Zillow.com said. [...]