Credit Crunch Risk Increases
The risk of an old fashioned destructive credit crunch seems to be growing with the disclosure by AIG insurance company, the worlds largest lender, that late mortgage payments are spreading from the subprime loan market to higher rated loan categories.
Consumers in the US are increasingly likely to experience a sharp spike in interest rates that may persist for a very long time. The artificially low rates of the Greenspan Fed era have lead to such credit market distortions that it may takes years for the credit markets to readjust.
If you have financing to arrange or if you need to clean up loans that are already outstanding this would likely be a good time to be getting on with the process.
If you brought speculative real estate and are facing the resetting of ARMs with much higher payments than your original payments you should consider dumping the property early on if you don’t have the cash flow to easily carry higher interest rates and higher mortgage payments.
Even if you have to take a loss on the transaction that would be far better than letting housing mortgage loan payments that you can not afford to pay drag you under and wreck your financial future.
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