No, it’s not because we’re all married to twice-bankrupt wives that upbraid us about not spending enough.
It’s because more and more Americans who aren’t paying their mortgages are still in their homes, just waiting for the bank to kick them out.
WaPo: The backlog of seriously delinquent mortgages, which so far affects about 1 million borrowers, is a shadow over hopes for a rebound in the nation’s housing markets. It masks the full extent of the foreclosure crisis and threatens to depress prices even further just as some parts of the country are hinting at recovery. For lenders, it could portend even more financial losses tied to the mortgage meltdown.
“It just means foreclosure rates are going to keep rising,” said Patrick Newport, an economist for IHS Global Insight.
We’re not sure if it means more financial losses or not. Plenty of mortgage-related securities have been written down to nuclear-winter levels, and presumably nuclear winter takes into account the fact that a backlog of mortgage delinquencies means people get to stay in their homes.
But the housing market is getting worse, and that portends bad news for the real, non-financial economy. Increased foreclosures, homeowners stuck in limbo, a backlog of homes ready to flood the market — none of this will do wonders for consumer spending or confidence.