Forget underwater mortgages; worry about higher rates
(Source: Housingwire) According to Housingwire “the U.S. mortgage market is about to be blindsided by a real doozy of a problem.” And while home values may be increasing somewhat, their studies show that “Rising rates will swamp households faster than rising home prices can save others.”
The big problem
While many homeowners were hoping they could now refinance out of their problems, they’re facing higher and higher interest rates, which means far fewer people than expected will be able to get out of the hole they are in. And worst yet, the housing market is already showing signs of slowing after a nationwide 12% run up in home values in 2013. There are 6.5 Million homeowners underwater at risk of losing their homes. They can’t refinance into negative equity, and now, it’s becoming increasingly difficult to refinance into even positive equity since rates are growing faster than home values.
What does this all mean?
More short sales and a potentially devastating new wave of REOs.