Harvard University Director says US plan to stop housing slump is too late

The depreciating housing market in the US may trigger totally losing of homes for more than 1.2 million people in America, because the plan to rescue them through freezing of interest rates was too late according to the Director of Harvard University,Nicolas Retsinas. was it really too late?


"At best, it may stop some of the hemorrhaging of the housing market but it doesn't necessarily turn things around," said Nicolas Retsinas, director of Harvard University's Joint Centre for Housing Studies in Cambridge, Massachusetts. "The fundamental problem with housing is oversupply."

Existing home prices might fall as much as 15 per cent by 2009 from their peak last year, even if interest rates were frozen on one fifth of 2006 subprime loans resetting next year, said Mark Zandi, chief economist at Moody's Economy.com.

About 2.8 million mortgage loan defaults would occur next year and in 2009, Mr Zandi said in testimony last week before the US Senate judiciary committee.

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