Wall Street (WiredPRNews.com) — A recent report from CNN stated that apart from bad mortgage loans, some market experts and economists are now worried about other problems that have been lurking around which can cause a new financial crisis for businesses and consumers. Several kinds of loans that are giving rise to such concerns are credit card loans and prime mortgage loans.
Many of such loans have started seeing a rise in delinquencies and defaults just like the sub-prime mortgages during the last year. If the number of defaults continues to rise, it may cause similar problems in the market for the securities which will lead to worldwide losses for the investors. Although these problems are hiding behind other financial problems, they can lead to tighter credit and highest costs for the consumers which can eventually lead to longer slump in the economy in comparison to the current forecast.
A survey of Mortgage Bankers’ Association revealed that around 2% of all the prime loans are either due past the 90 days or are already under the procedure of foreclosure. This percentage is over twice than the last year. One of the facts is that the homeowners are finding it difficult to sell out their homes because of record drops in their home values which is leading to a record number of foreclosures.
According to the American Bankers’ Association, prime mortgage loans are not the only ones showing early signals of increasing problems but the number of defaults in auto loans is also steadily increasing. The delinquencies in car loans were raised to 3.13 percent which is the highest number since 1990.
Apart from that, high prices of gas have also led to continuous decline in reselling value of various light trucks like pickups and SUV’s. The Chief Economist of Wachovia, John Silvia, said that they are worried because due to high price of gas, the consumers may no longer be able to afford driving their vehicles and may dump them.
Wired Finance Reporter