HERE COMES THE ALT-A CRISIS

This short piece provides an interesting & scary comparison between the sub-prime & Alt-A levels of lending and default. The information has been obtained from the New York Fed and is pretty easy to follow.

The basics are that there is more lending in the Alt-A market for higher amounts a lot of which is for non owner-occupied housing. The lending ratio is up around the 90% mark and defaults are already at 14% which is similar to that of the sub-prime area last year.The credit rating difference between these two isn't that great. The majority of these loan applicants were based on stated income or "liar loans". And, finally, the majority of mortgage resets on the Alt-A's are set to kick in over the next two years.

There are strong comparisons that can be made between America & Ireland.
We also had 100% lending (and more).
Lax lending standards.
The "rent a room" to supplement/increase the mortgage.
Interest only loans; when people finally see the real level of repayments they have to make what will happen?
Negative equity is beginning to kick in for those who have purchased in recent times on a high loan to value rate.

In America, it's easier to file for bankruptcy, hand back the keys and walk away. It's not so easy in Ireland, but that's not to say it won't happen.
What about construction workers who can't afford their mortgages due to lack of work. What's to stop them from picking up tools, moving to Oz where there's a demand for their labour and leaving their Irish mortgage troubles behind them?