It makes sense. Unemployment for February could hit 8%. It could move closer to 9% by the end of April. That does not include people who have been out of work for extended periods and are not looking now.
Along with jobs cuts, fewer people are getting raises and many are taking pay cuts.
The number of people who cannot pay their mortgages is spiking up.
According to the FT, “The percentage of loans that were in foreclosure or at least one payment past due rose to 11.93 per cent in the fourth quarter, the highest since the MBA began keeping records in 1972 and a jump of almost 2 percentage points since the third quarter.”
Despite the Administration’s new mortgage rescue plan, the figure is likely to go higher. More people will lose jobs. More homeowners will find that their home loans are much larger than the equity of their houses. As home prices fall, that ratio will get even worse. A home is simply becoming an awful long-term investment.
No matter how much assistance goes into the system to help “worthy” people keep their houses, the number of people who cannot wait to turn in the keys or have lost work will continue to rise.
Douglas A. McIntyre
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