How will the US property slump hit consumers?

The latest statistics suggest that US housing market activity is slowing dramatically, say Andrew Selsby and John Robson of RH Asset Management. Usually this would have a relatively minor effect on US economic growth. But US consumers have never relied on rising house prices to fund their standard of living to this extent before. If house prices start falling now, the impact on economic growth could be drastic...

Central to the world's economy is the buoyancy of US consumers and their willingness to borrow and spend. To do this, the US housing market is key:

More than $2 trillion of US mortgage debt, about 25% of all mortgage loans, comes up for interest rate resets in 2006 and 2007. That means that mortgage payments will rise.

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