Peter Schiff Warns of $3 Trillion Losses in U.S. Mortgage Market

Peter Schiff, chief economist at Euro Pacific Asset Management, has warned of significant losses in the U.S. mortgage market. He claims that rising interest rates could lead to a financial crisis more severe than that of 2008. Schiff stated that if current market interest rates are around 7.5%, the valuation losses on existing loan securities could reach approximately $2 trillion, and if rates rise to 8.5%, the losses could expand to $3 trillion. The outstanding balance of fixed-rate mortgages in the U.S. is about $8.3 trillion, with an average interest rate of 4.6%. Schiff emphasized that the losses recorded on the books by mortgage lenders are already more than four times greater than during the global financial crisis. However, the current mortgage delinquency rate stands at 1.86%, which is one-sixth of the rate during the financial crisis, raising questions about whether the potential for a crisis is being overstated. The profitability and soundness indicators of U.S. banks are showing relatively stable trends, and whether Schiff's warnings materialize depends on the capital capacity and liquidity situation of financial institutions.

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