You may have missed this over the weekend: The Saturday WSJ reports that "More than $2 trillion of U.S. mortgage debt, or about a quarter of all mortgage loans outstanding, comes up for interest-rate resets in 2006 and 2007, estimates Moody's Economy.com, a research firm in West Chester, Pa."

Let's repeat that number: Over the next 20 months, more than two trillion dollars worth of adjustable rate mortgages will reset at higher interest rates.

Well, the worst case scenario is a wave of defaults, foreclosures, and forced sales, forcing home prices appreciably (depreciably?) lower.

Sounds like a good time to be a buyer!

Gee, I hope Carmella's Spec house wasn't variable mortgaged.

Heh.

Did you read the update?

A quick back of the envelope calculation shows that the resets ... are dwarfed by the much bigger macro issue of the loss of cash out refis -- which have been a major driver of consumer spending.

Former Fed Chair Greenspan estimates that over $600 billion in cash out refis took place in 2004 -- that dwarfs the increase in monthly payments. Goldman Sachs estimates that in 2005, it was $834 billion. The expectation is that consumers spent 68% of that money.

You may have missed this over the weekend: The Saturday WSJ reports that "More than $2 trillion of U.S. mortgage debt, or about a quarter of all mortgage loans outstanding, comes up for interest-rate resets in 2006 and 2007, estimates Moody's Economy.com, a research firm in West Chester, Pa."

Let's repeat that number: Over the next 20 months, more than two trillion dollars worth of adjustable rate mortgages will reset at higher interest rates.

That sound you hear is the ship hitting the iceberg.