EB Business Times: PMI Index shows rising risk to home prices
Private Mortgage Insurance is insurance that you have to buy when you cannot put down a minimum percentage of the house price as downpayment. Obviously, people who offer PMI are going to be keenly sensitive to house price futures as that determines their worst case should the buyer default on the loan.
The East Bay Business Journal has an article about
the Q4 rise in the PMI Risk Index. A rise indicates increasing likelihood that house prices will fall. Overall, the rise looks fairly mild. Here's the reasoning:
But PMI analysts reported that despite continued home price appreciation, a lack of significant job growth or a premature tightening of monetary policy by the Federal Reserve could hinder future economic growth. Despite strong economic growth, businesses have not started to strongly engage in the hiring process. Employment growth has disappointed the expectations forecasted by economists.
With a rising government budget and trade deficit, an expanding U.S. economy, a devaluating dollar, and increasing commodity prices, many economists are suggesting that the Federal Reserve will tighten monetary policy in the future.
Posted by dapkus at February 4, 2004 04:03 PM
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