Skyrocketing Consumer Debt & Falling Rates
With home mortgages, the primary collateral for the loan balance is the home itself. In the event of a future default, the lender can file a foreclosure notice and take the property back several months later. With automobile loans, the car dealership or current lender servicing the loan can repossess the car.

Homeowners often refinance their non-deductible consumer debt that generally have shorter terms, much higher interest rates, and no tax benefits most often into newer cash-out refinance mortgage loans that reduce their monthly debt obligations. While this can be wise for many property owners, it may be a bit risky for other property owners if they leverage their homes too much.

With credit cards, lenders don’t have any real collateral to protect their financial interests, which is why the interest rates can easily be double-digits about 10%, 20%, or 30% in annual rates and fees, regardless of any national usury laws that were meant to protect borrowers from being charged “unnecessarily and unfairly high rates and fees” as usury laws were originally designed to do when first drafted.

Zero Hedge has reported that 50% of Americans don’t have access to even $400 cash for an emergency situation. Some tenants pay upwards of 50% to 60% of their income on rent. A past 2017 study by Northwestern Mutual noted the following details in regard to the lack of cash and high credit card balances for upwards of 50% of young and older Americans today:

* 50% of Baby Boomers have basically no retirement savings.

* 50% of Americans (excluding mortgage balances) have outstanding debt balances (credit cards, etc.) of more than $25,000. 

* The average American with debt has credit card balances of $37,000, and an annual income of just $30,000. 

* Over 45% of consumers spend up to 50% of their monthly income on debt repayments that are typically near minimum monthly payments.


Rising Global Debt 


According to a report released by IIF (Institute of International Finance) Global Debt Monitor, debt rose to a whopping $246 trillion in the 1st quarter of 2019. In just the first three months of 2019, global debt increased by a staggering $3 trillion dollar amount. The rate of global debt far outpaced the rate of economic growth in the same first quarter of 2019 as the total debt/GDP (Gross Domestic Product) ratio rose to 320%.

The same IIF Global Debt Monitor report for Q1 2019 noted that the debt by sector as a percentage of GDP as follows:

Households: 59.8%

* Non-financial corporates: 91.4%

* Government: 87.2%

* Financial corporates: 80.8%


Rate Cuts and Negative Yields

As of 2019, there’s reportedly an estimated $13.64 trillion dollars worldwide that generates negative yields or returns for the investors who hold government or corporate bonds. This same $13.64 trillion dollar number represents approximately 25% of all sovereign or corporate bond debt worldwide. 


On July 31, 2019, the Federal Reserve announced that they cut short-term rates 0.25% (a quarter point). Their new target range for its overnight lending rate is now somewhere within the 2% to 2.25% rate range. This is 25 basis points lower than their last Fed meeting decision reached on June 19th. This was the first rate cut since the start of the financial recession (or depression) in almost 11 years ago dating back to December 2008.

It’s fairly likely that the Fed will cut rates one or more times in future 2020 meeting dates. If so, short and long-term borrowing costs may move downward and become more affordable for consumers and homeowners. If this happens, then it may be a boost to the housing and financial markets for so long as the economy stabilizes in other sectors as well such as international trade, consumer spending and the retail sector, government deficit spending levels, and other economic factors or trends.

We shall see what happens in the near future in 2020 and beyond.

* The blog article above is a partial excerpt from my previous article entitled Interest Rate and Home Price Swings in the Realty 411 Magazine linked below (pages 87 - 91):
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December 2, 2009

Commercial Mortgage Defaults Rise


According to Real Estate Econometrics, commercial mortgage default rates more than doubled to 3.4% in the 3rd quarter of this year. A year prior (3rd quarter 2008), commercial mortgage default rates for loans held by U.S. banks were close to 1.37%. In the 2nd quarter of 2009, commercial default rates were close to 2.88%.

Mortgage loans for commercial properties originated in 2006 and 2007 are experiencing the most significant shortfalls in current operating cash flow in relation to current deb...


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November 20, 2009

Commercial Real Estate's Credit Crisis


Commercial Real Estate sales are off now an incredibly scary 82% in 2009 (as compared with 2008). Two years ago, the total combined value of all commercial real estate nationwide was about $ 6.5 Trillion. Back then, the total estimated combined commercial loan balances were estimated to near a 3.5 Trillion dollar range.

Today, the total combined estimated value of all commercial real estate in America is now valued to be near the same $3.5 Trillion dollar combined outstanding commercial mortgag...


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September 30, 2009

Yesterday Was The One Year Anniversary Of The Bank & Wall Street Collapse


As many readers may remember, I accurately forecast the global stock meltdown (began the week of September 29th, 2008) last July 2008. I warned readers, friends, family, clients, and co-workers that I was absolutely certain the world's stock and financial markets would either freeze, collapse, or that the U.S. Dow Jones index would drop at least 20% in value during a two (2) week time period beginning the week of September 29th, 2008.

Several readers and friends took my advice to heart, and so...


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September 14, 2009

Causes of The Credit Crisis


Excess liquidity over the past decade is probably the main reason for the on-going and worsening derivatives meltdown worldwide. There was too much money chasing too many quality deals worldwide as well.

In addition, bank and Wall Street regulations were almost non-existent partly due to the repealing of The Glass-Steagall Act which had been in place since after end of The Great Depression (1929 - 1939). Glass-Steagall kept banks, insurance companies, and Wall Street investment firms separate...


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September 3, 2009

Is The Stock Market Set To Fall Very Soon?


What has been the total return to investors in the S & P 500 Index (the broadest measure of the U.S. stock market) over the past 12 years? The answer is ZERO.

Amazingly, the same S & P 500 index is up almost 70% over the past six (6) months in spite of the on-going global depression happening worldwide. How can the stock market be up so dramatically in such a short period of time especially since unemployment numbers keep worsening, retail sales keep collapsing, and the overall real estate ma...


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August 25, 2009

The Federal Reserve Must Release Their Financial Data & The FDIC Report May Be Released Today!!!


As I have written for years, the FDIC has been underfunded and bankrupt for too long. Sadly, the FDIC (Federal Deposit Insurance Corp.) was set up shortly after the end of the last Great Depression (1929 - 1939) to "insure" bank accounts for customers throughout our great nation.

Since our banking system is actually considered a "Fractional Reserve System" as banks lend out up to 20 to 50 times the actual amount of their deposited funds via leveraged consumer, business, and real estate loans,...


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August 19, 2009

The FDIC Releases Their Next Financial Report On August 25th!!!!


The technically insolvent FDIC (Federal Deposit Insurance Corporation) releases their next scheduled financial report next Tuesday (August 25th). Many financial analysts are anticipating a very negative financial report. In addition, numerous banks are expected to fail in the very near term beginning as soon as this Friday (August 21st).

Since Washington Mutual (the largest takeover in American banking history) collapsed last September (as I accurately forecast years in advance), they effecti...


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August 18, 2009

Postponed Foreclosures Graph


In the 2nd week of August (Aug. 10th - 14th, 2009), there were almost 82% of all properties which were postponed for final Trustee's Auction Sale in the four (4) major Southern California counties of Los Angeles, Orange, Riverside, and San Bernardino.

The primary reasons for the typically unilateral (by the lenders in most cases) postponements of the scheduled final Trustee's Auction sales is that many lenders do not want to acknowledge how bad their non-performing losses are right now. In add...


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August 5, 2009

WOW!!! 12,690 Properties Are Scheduled For Final Foreclosure Sale Just This Week (4 So. Calif. Counties)


According to our"Find and Fund" Foreclosure Analysis System, there are approximately 12,690 properties scheduled for final Trustee's Sale Foreclosure Auction (at the court steps) just this week alone (Monday, August 3rd - Friday, August 7th) in just four (4) Southern California conties (Los Angeles, Orange, Riverside, and San Bernardino).

Our system forecasts that between 70% to 75% will be UNILATERALLY postponed by the foreclosing lender as lenders are trying to pace the high number of forec...


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August 4, 2009

California Foreclosure Data: Week of July 27th - July 31st, 2009


Listed below is all of the foreclosure data compiled by our "Find and Fund" Foreclosure system in just last week along (July 27th - July 31st) in three counties (Los Angeles, Orange, and Riverside).

There were 870 cancelled, short sale, or loan modifications completed in the three (3) counties listed above. There were 1053 properties which had no bidders at the final Trustee's Auction Sales.

As a result, these same 1053 properties reverted back to their respective foreclosing bank as an REO...


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