Double dip fears fail to dampen enthusiasm for mortgages, housing

Home run

mortgage-baseball

Hedge funds made strong returns in 2010 purchasing mortgage securities trading at distressed prices. However, the long-predicted double dip in US home prices raises questions about the relative attractiveness of this strategy in 2011.

The S&P Case Shiller 20-City Composite, which tracks home prices in 20 major cities in the US, fell 1.6% for the 12 months to November 2010, the second consecutive month of annualised declines since prices stabilised in 2009.

The expectation is that home prices will