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Author: CIBC World Markets - Benjamin Tal
Article Date: August 2007
“Market optimism is back. But if it’s based mainly on expectations for a fed rate cut, then the recent stock market recovery is on shaky ground”. The words subprime crisis cab be used to describe recent months and/or more recently weeks. Mortgage rate resets were the catalyst of the subprime mortgage meltdown, one that is far from over. Approx $850 billion worth of mortgages are due to be reset during 2007 and 2008. These resets will be peak come November and will start easing into 2008. Year-to-date only one third have been reset. Of these mortgages, 75% are securitized and 80% are subprime. The bottom line is the subprime mortgage market in the US will continue to make headlines and get worse before it gets better.
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