Half of all mortgages will be "underwater" within two years!
NEW YORK - August 5, 2009 - The percentage of U.S. homeowners who owe more than their houses are worth will nearly double to 48% in 2011 from 26% at the end of March, portending another blow to the housing market, Deutsche Bank said on Wednesday.
Home price declines will have their biggest impact on prime "conforming" loans that meet underwriting and size guidelines of Fannie Mae and Freddie Mac, the bank said in a report. Prime conforming loans make up two-thirds of all mortgages, and are typically less risky because of stringent requirements.
"We project the next phase of the housing decline will have a far greater impact on prime borrowers," Deutsche analysts Karen Weaver and Ying Shen said in the report.
Of prime conforming loans, 41% will be "underwater" by the first quarter of 2011, up from 16% at the end of the first quarter 2009, it said. The report also said that 46% of prime jumbo loans will be larger than their properties' value, up from 29%.
Home price declines will have their biggest impact on prime "conforming" loans that meet underwriting and size guidelines of Fannie Mae and Freddie Mac, the bank said in a report. Prime conforming loans make up two-thirds of all mortgages, and are typically less risky because of stringent requirements.
"We project the next phase of the housing decline will have a far greater impact on prime borrowers," Deutsche analysts Karen Weaver and Ying Shen said in the report.
Of prime conforming loans, 41% will be "underwater" by the first quarter of 2011, up from 16% at the end of the first quarter 2009, it said. The report also said that 46% of prime jumbo loans will be larger than their properties' value, up from 29%.
