High Rates and
Risky Mortgages, Fuel Fears of Spike in, Foreclosures.
'Newsweek' reports that increased mortgage rates could result
in more homebuyers facing a higher risk of foreclosure.
According to the Mortgage Bankers Association,
applications for 5/1 adjustable-rate mortgages (ARM)
rose 32.5%, while loan rates reached the mid-6% range.
Last week, the total number of ARM
applications surged 15%, the highest
percentage since November of 2022.
At the same time, fixed mortgages
saw steady rate growth,
rising from 7.53% to hit 7.67%. .
While most mortgage rates increased
last week, rates on ARMs declined,
leading to an increase in ARM volume
and an increase in overall applications, Joel Kan, MBA Deputy Chief Economist, via 'Newsweek'.
The yield curve has become
less inverted in recent weeks, and
ARM pricing has certainly improved, Joel Kan, MBA Deputy Chief Economist, via 'Newsweek'.
'Newsweek' reports that, unlike fixed-rate mortgages,
ARM loans change to reflect current rates, meaning
foreclosure rates could increase over the coming years.
The risk to the buyers is that
eventually the rates will go up
and they may not be able
to afford the home, Rocke Andrews, Mortgage broker, via Realtor.com.
But prices are going up so quickly that,
if they wait, they may not be able to
afford the home. This is a way to get
into the home now and refinance later, Rocke Andrews, Mortgage broker, via Realtor.com.
According to a study from First American CoreLogic,
among 8.37 million ARMs, one in eight were estimated
to end in foreclosure, accounting for 1.1 million loans.
