ear at the expense to the middle class or will the large banks supply this for now and absorb the cost by shaking off investors who don't like the roller coaster rides of price fluctuation in the stock market?
2007-03-14 08:43:22 · 2 answers · asked by Anonymous in Business & Finance ➔ Investing
Note that the expense charge off has to appear somewhere. It has to be absorbed. How will the middle class pay for it?
2007-03-14 08:52:30 · update #1
Which subprime market? Conventional mortgages or the speculative (interest-only + negative amortization) segment? The former will shrink somewhat, as is usual in periods of rising interest rates; the second will all but disappear...
2007-03-14 08:50:33 · answer #1 · answered by NC 7 · 1⤊ 0⤋
The subprime market will probably disappear for quiet a while. Many sub-prime lenders are going bankrupt and several are under criminla investigation. It appears that the problem is going to spread to the next level of lenders above sub-prime.
There is a lot of disagreement about the size of the sub-prime market. I've seen estimates of 15 to 40%. The government will probably supply enough liquidity to keep major banks or markets from going under, which will probably devalue to dollar more.
Individuals will be effected in several ways: there will be more houses on the market, driving down prices and lenders will be much more stringent in granting loans.
2007-03-14 16:26:42 · answer #2 · answered by Anonymous · 0⤊ 0⤋