Are We Reaching A R/E Tipping Point? by Matthew Keegan
Not many people are publicly saying it, but a crucial "tipping point" in the current real estate market may be within reach. Specifically, with the Federal Reserve Bank having recently announced its 17th consecutive interest rate hike, adjustable
Not many people are publicly saying it, but a crucial "tipping point" in the current real estate market may be within reach. Specifically, with the Federal Reserve Bank having recently announced its 17th consecutive interest rate hike, adjustable rate mortgages established in 2002 and 2003 when rates were historically low are now coming up for an adjustment.
This won't be a big deal for most folks who will be in a position to refinance to a fixed rate mortgage before the adjustment date kicks in. However, the higher fixed rate mortgage will still present challenges to some homeowners who could see mortgage payments one third higher than before. In addition, some homeowners have been shocked to learn that they won't qualify for refinancing due to adverse changes in their income, etc. In other words, this latter group of people will be stuck with their current adjustable rate mortgages and subject to ever increasing payouts as mortgage interest rates show no sign of holding still or falling.
The tipping point with all of this is foreclosures. If unable to keep up with the higher payments some homeowners could fall behind or simply quit making payments; as a result the foreclosure rate may rise dramatically. If this scenario plays out, look for more personal bankruptcies to result and a glut of homes on the market to push housing prices down. The longer term result could be a huge drop off in the economy, making the "r" word -- recession -- the word of the day.
Copyright 2006 For additional information regarding Matt Keegan, The Article Writer, please visit his Mortgage Paradise blog for additional real estate related subject matters.
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