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Originally Posted by dig420
they're tied to the low prime rate, which is being raised at a sane pace. I don't see anything to get worked up about.
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I hope you're right. But considering how many of the recent mortgages are ARMs, even nominal increases in rates could start a bloodbath:
Foreclosures May Jump As ARMs Reset
This year, more than $300 billion worth of hybrid ARMs will readjust for the first time. That number will jump to approximately $1 trillion in 2007, according to the MBA. Monthly payments will leap too, many beyond what homeowners can afford.
But as the housing market slows, experts expect foreclosures to skyrocket in those areas that have experienced the highest appreciation rate -- like California, Florida, Virginia and Washington, D.C.
California, where the median home price reached $468,000 in April, leads the nation in the percentage of homes purchased with adjustable rate mortgages.
Nationwide, ARMs account for 24 percent of all home loans. <--
http://biz.yahoo.com/ap/060619/foreclosure.html?.v=11