$1 Trillion Needed For U.S. Mortgage Market

Bloomberg reports that the size of the U.S. home-mortgage market is $11 trillion. That market needs $1 trillion in new investment to stop the decline in home equity prices according to analysts at Friedman, Billings, Ramsey & Co.

“There is an imbalance between housing debt and the capital base and the quick way to return to equilibrium is for asset prices to adjust downward,” the Arlington, Virginia-based analysts led by Paul J. Miller Jr. wrote in a report today.

Mortgage-asset prices are tumbling partly because investors are borrowing less, as banks rein in both how much they lend and how much they borrow for their own investments, the analysts wrote. Carlyle Capital Corp., Carlyle Group’s mortgage-bond fund, is among investors saying bond-secured lending is tightening.

As the amount of leverage, or borrowed money, used to boost investment returns decreases, the yields and extra yields over borrowing costs on mortgage assets need to increase to allow buyers to earn the 15 percent returns they typically target, the analysts wrote. Higher yields and spreads also reduce the amount of assets their investments must soak up to achieve the returns.

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (Alexander90210.com), he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Alexander90210.com. Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
This entry was posted in Articles and tagged , , , , , , , , , , , , , , , , , , , . Bookmark the permalink.