Stocks for financial groups and builders got hit pretty hard today with a round of bad news from the US housing slump and mortgage defaults from overextended borrowers. HSBC announced that their bad debt charge from last year is $1.8 billion more than expected due to US mortgage lending. Hey, a billion here, a billion there, pretty soon you’re talking about real money!
Subprime lender New Century Financial saw their stock drop by an astounding 36% today as a wave of rising defaults and late payments is making itself apparent across the US. Many smaller subprime lenders have closed down over the last few months and there are concerns that the combination of dropping home equity, higher mortgage rates and record low levels of personal saving could lead to more trouble for the US economy as a whole.
Meanwhile in Vancouver scientists have announced the discovery of a tiny hole in the Bozone layer that insulates our economy from the US. The CMHC says that this should not be a concern as it is a very tiny hole that at the very worst it may cause a “soft feathery plateau” in our once hot housing market, and “hey, who doesn’t like soft feathery plateaus?”