- Wealth PMS (50L+)
Unemployment has reached 6.7% in the US, with November showing a drop of 533,000 jobs. Over 1.25 million jobs in the last three months have been lost, and the number for the year is 1.91 million.
That’s nearly 20 lakh jobs lost – have we, in India, come to that or close? And, the question to ask really, is that going to happen?
Another piece of news is that mortgages in foreclosure or 30 days behind or worse is now nearly 10% of all mortgages. Worse, it is not just subprime – Calculated Risk says the problem is in prime ARM loans, and prime loan delinquencies have now gone up 41 basis points (more than 10%).
You lose your job, you lose your house…it doesn’t take long for the second to happen after the first. Until the job losses get better, I don’t see how the mortgage market will improve.
Meanwhile in India, we have the hope that reducing interest rates will stem the real estate fall. DLF says he wants 7 percent interest rates. The U.S. has long term mortgage rates of 5.6% and a funds rate of 1%, and they’re going nuts – in India, prices are still way too high. Our real estate bust has yet to begin.