Mortgage Crisis Quick Facts Update
It’s late 2011 and we look back to 2007, and where we are now. Mortgages were at the epicenter of the financial crisis that began in 2007 and resulted in more than $2 trillion in writedowns and losses at the world’s largest financial institutions based on data compiled by Bloomberg.
Sales of existing homes have averaged 4.97 million a month this year, little changed since 2008 and down from 6.52 million in 2007, according to the National Association of Realtors. The median price decreased to $162,500 in October from $170,600 a year earlier and from the record $230,300 in July 2006.
While mortgage rates are already at about record lows, housing continues to constrain the economy, with the National Association of Realtors saying in Washington last week that the median price of U.S. existing homes dropped 4.7 percent in October from a year ago.
Borrowers with a 30-year conventional mortgage would save $40 billion to $50 billion annually in aggregate if they could all refinance into a new loan with a 3.75 percent rate, according to JPMorgan Chase & Co.
Housing continues to constrain the economy, with the National Association of Realtors saying in Washington last week that the median price of U.S. existing homes dropped 4.7 percent in October from a year ago.
At the current pace of sales it would take eight months to clear the inventory of available properties, compared with the average of 4.8 before 2007.
If you start with our first articles, or just randomly read our articles, you can see the full history of this financial crisis as it built, exploded, and finally crashed. Our theory – formulated prior to 2005 – was that predatory lending became acceptable and was called subprime. Unfortunately the theory proved to be correct.