Deutsche Bank: 'Home Equity' Rises by $1.1 Trillion

Over the past 12 months consumers have seen the paper value of their homes rise by $1.1 trillion, the first year-over-year increase in almost four years, according to a new report by Deutsche Bank. DB analysts write that the "upshot" is that household buying power in the first quarter "will show a meaningful improvement relative to recent history." Basing its estimate on figures compiled by the Federal Reserve, DB says home equity grew by $540 billion and $420 billion in the second and third quarters of last year, respectively, and less slowly in the fourth quarter. Even though DB seems somewhat bullish on home values, the housing and mortgage markets fear that when the government halts its MBS buying program on March 31 that rates could rise on 30-year fixed-rate loans, snuffing out an improvement in housing values. Concerns remain on delinquencies and an anticipated wave of foreclosures if both employment and values do not improve over the next two quarters.