Davis Washington

🚨 A $2 TRILLION MORTGAGE DISASTER IS BUILDING IN THE U.S., AND IT COULD MAKE THE 2008 CRISIS LOOK SMALL The U.S. has roughly $8.3 trillion in fixed rate mortgages, averaging just 4.6% interest, while new mortgage rates are around 7.4%. Based on a simplified 25-year loan valuation, those mortgages could already be worth $1.94 trillion less, even without a single default. For comparison, estimated mortgage related losses during the 2008 crisis totaled up to around $1.4 trillion. That's about 1.4 times that amount, although today's losses are still on paper. The bigger concern is that these losses don't require homeowners to stop making payments. They come from the gap between old mortgage rates and current borrowing costs. In 2023, rising rates helped bring down Silicon Valley Bank after massive losses on long-term securities. Now a similar interest-rate risk is hanging over a much larger mortgage market. If institutions are forced to sell at heavy discounts, those paper losses could become real. The next financial shock might not start with homeowners defaulting. It could start with the institutions holding their mortgages.