Tuesday, January 05, 2010

Was 2009 the eye of the storm for housing?

You have to squint a little to see the pink on this chart. However, you'll notice that 2010 and 2011 look a lot like 2007 and 2008 when you consider the percentage of mortgages with rate resets.

What should really scare us is that the last round of resets triggered massive defaults and waves of foreclosures. To fight these problems in the housing market we've thrown everything at the housing market including:

Cuts interest rates from 5.25-0.25% (Sept ’07-today)
The Bear Stearns deal/Fed buys $30 billion in junk mortgages (March ’08)
Taken over AIG for $85 billion (Sept ’08)
Implemented the $700 billion Troubled Assets Relief Program (Oct ’08)
Bought commercial paper (non-bank debt) from non-financials (Oct ’08)
Offered $540 billion to backstop money market funds (Oct ’08)
Backstopped up to $280 billion of Citigroup’s liabilities (Oct ’08).
Given another $40 billion to AIG (Nov ’08)
Backstopped up $140 billion of Bank of America’s liabilities (Jan ’09)
Bought $300 billion worth of Treasuries (Mar ’09)
Bought $1.25 trillion in agency mortgage backed securities (Mar ’09-’10)
Bought $200 billion in agency debt (Mar ’09-’10)
Various homebuyer programs like First Time Homebuyers, Loan Modifications, etc.

If the housing market struggles again in 2009 will we have the resources to rescue the market again? It's an interesting question.


Jeff Green said...

The chart is shows creepy data on the year 2012-2016. Hope it turns the other way. Let's wait and see.

Jeff Green said...

The chart shows creepy data on the year 2012-2016. Hope it turns the other way. Let's wait and see.

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