Would a Rate Cut Save the Housing Market?

Mish has a great one:

A 190 basis point hike in two weeks was so shocking that I asked for a repeat. "90?" I asked. "No. that's 190 basis points" came the reply. For those not familiar with the term basis points, 100 basis points is a 1% rise in the loan rate. For example, 190 basis points would send a mortgage loan from 7% to 8.9%. The bigger the loan the bigger the increase in monthly payments (ouch!)

Virtually any subprime borrower whose arm is due to reset later this year or early next year and has not yet rolled over the loan is obviously in deep trouble regardless of what the Fed does or does not do. Not only is the teaser rate itself going to rise dramatically because of the rising treasury rates, the risk component has risen as much as 190 basis points in addition to that.

You'll want to read this one.