[color="Red"]...Hence the "clear signs" Nationwide sees that the British housing market is finally slowing after trebling in the last decade and adding another 10% since mid-2006 alone. There's a big drop beneath current prices, in other words. The average UK home now costs £183,898...nearly $370,000.

In the United States, home prices might be falling faster - and starting from slightly less absurd heights - but the sorry faces at US mortgage brokers look just the same. Banks are "jacking up short-term rates to dissuade buyers from choosing riskier mortgages as defaults on subprime loans climb," reckons the Chicago Tribune. "The housing slump will worsen," the paper says, citing truly gloomy forecasts from J.P.Morgan, the Mortgage Bankers Association, and International Strategy & Investment in New York, "as banks restrict the availability of credit and falling real-estate prices prevent owners from tapping home equity for extra spending money."

No surprise then that, across the US as a whole, new mortgage applications fell by 4% in the week-ending Aug. 24th. The interest rate charged on one-year home loans leapt at the same time, up from 5.84% to 6.51% to record the biggest jump since the Mortgage Bankers Association began keeping records more than ten years ago.

How to unblock the plumbing that pipes money to would-be homebuyers? The world and his stockbroker now expect the Bernanke Fed to cut its key lending rate at the Sept. 18th meeting. Interest-rate futures put the chance of a 25-basis points cut at 100%. And just today (Sept. 4th) the Fed and the Treasury asked mortgage lenders who've parceled and sold outstanding home-loans as an investment product to other financial institutions to consider "loss mitigation strategies [including], for example, loan modifications, deferral of payments, or a reduction of principal."

[color="Red"]Evidently, the Fed is worried - very worried. The looming wave of non-payment by subprime home-buyers as they face a sharp hike in their adjustable-rate mortgages now threatens a second wave of Bear Stearns-style losses and fire-sale liquidations. "The $197 billion of mortgage resets so far this year is less than we will see in two months [Feb. and March] of next year," as John Mauldin of Millennium Wave Advisors recently noted. "The first six months of next year will see more than the total for 2007, or $521 billion."

There's also the small issue of foreclosures and forced auctions accelerating the rate of deflation in home prices, too. And throwing young families out of their homes never plays well with the electorate, least of all when you're trying to assure everybody that the problem is "contained" and real-estate only ever goes up in the long run...

...But for as long as the Fed and its agents continue to chastise state-chartered banks for their lax lending practices - and for as long as Written Agreements, if not cash penalties, prevent the most wayward lenders from lending anew - how can Dr.Bernanke ever hope to prop up the bottom of the US real estate ladder?...

Source:http://www.safehaven.com/article-8344.htm

In other words, the real estate industry, banking, investment houses which speculated in real estate securities, CDO's, derivatives, mutual funds, stock speculators, hedge-funds and their managers, insurance companies, pension companies, pension holders, home owners, borrowers, etc., are all in a shitload of trouble for at least the next twelve months!:eek::confused::(;)

Related Article:http://www.msnbc.msn.com/id/20546324/site/newsweek/?from=rss