[PEN-L:36151] On the Home Equity Front

[Yoshie Furuhashi <furuhashi.1@xxxxxxx>]

*****   New Home Sales Fall 8 Pct. in February
Wed March 26, 2003 12:01 PM ET
By Mark Felsenthal

WASHINGTON (Reuters) - Purchases of new homes fell 8.1 percent in
February to their lowest level in more than two years, the government
said on Wednesday, the second straight monthly decline in spite of
some of the lowest mortgage interest rates since the early 1960s.

New home sales slid to a seasonally adjusted 854,00 unit annual rate
last month from an upwardly revised 929,000 unit clip in January.
January's sales level marked a 12.6 percent drop from December.

Although an unusually cold and snowy month may have kept buyers
indoors, sales fell well short of the expectations of analysts polled
by Reuters, who on average had forecast a rise to a 935,000 unit
sales pace.

Consumer worries about the state of the economy and the U.S.-led war
on Iraq may now outweigh the appeal of cheap loans, one analyst said.

"This weakening in February, while it may have some special
considerations, is also a harbinger of some weaker numbers to come.
It doesn't look like there's anything positive out there in terms of
consumer confidence and the war with Iraq," said Fred Breimyer, chief
economist for State Street Corp.

Americans bought new homes at the slowest rate in February since
August 2000, the Commerce Department said.

Inventories rose to the highest level in more than six years. The
time it would take to sell homes on the market at current sales rates
rose to 5 months from 4.5 months in January....

<http://asia.reuters.com/newsArticle.jhtml?type=businessNews&storyID=2453263>
*****

*****   US consumer confidence declines again
By Peronet Despeignes in Washington
Published: March 25 2003 15:33 | Last Updated: March 25 2003 15:33

US consumer confidence fell to a new  nine-year low in the days
leading to the beginning of the US war with Iraq, according to
figures released on Tuesday.

The Conference Board said its index of consumer confidence fell to a
preliminary 62.5 in March, the lowest reading since October 1993. The
index, which is based on a monthly survey of 5,000 households, has
fallen more than 40 per cent from last  year's high of 110.3 in May.

The Board said it was hopeful that a quick resolution of the war with
Iraq would lead to a rebound in confidence, but that the course of
the job market would determine whether it would last.

While a quick and successful outcome in the Middle East conflict
would certainly ease some of the uncertainties facing consumers and
therefore boost confidence, it is the economic fundamentals that will
determine whether a rebound is sustainable,? says Lynn Franco, a
Board official.

The end of the Gulf War in 1991 produced a surge in confidence, but
labour market conditions quickly diminished the spark. So if history
repeats itself, the current job scenario will do little to maintain
any post-war surge in confidence....

<http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1048313125114>
*****

*****   New York Times   March 26, 2003
Home Equity Borrowing Rises to Worrisome Levels
By RIVA D. ATLAS

Americans are borrowing against their homes at unprecedented levels,
leading some bankruptcy lawyers and consumer advocates to warn that
many people could wind up losing their houses.

Homeowners raised $130 billion last year through home equity loans
and lines of credit, nearly double the total a year earlier,
according to the Federal Reserve.

This boom in borrowing comes at a time when housing prices nationwide
are still strong, even in places like the New York metropolitan area
where prices have risen sharply.

As long as their home values rise, borrowers who are having trouble
making their payments can take out further loans or can sell their
homes for more than they owe. Indeed, people have not fallen behind
on their home equity loans nationwide in troubling numbers.

But in parts of the Midwest and the Southeast where home prices have
softened, delinquencies on home equity debt have started to rise, and
bankruptcy lawyers are reporting that a growing number of their
clients are losing their homes to the banks.

"I'm representing a large number of newly homeless people," said
Barbara May, a bankruptcy lawyer in St. Paul. Many of these people
have taken on home equity loans in addition to their existing
mortgages.

"We are just buried in foreclosures," she said.

Bankruptcy lawyers warn that the problem could spread to other parts
of the country if home prices soften or if the economy does not
improve....

<http://www.nytimes.com/2003/03/26/business/26HOME.html>   *****
--
Yoshie

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