The interest rate cuts made by the Federal Reserve over the past months have helped keep adjustable-rate mortgage increases modest, but it may not be all the housing market need.
Although the loans are adjusting by only 1% on average, loan defaults and foreclosures are still rising. Many industry experts believe this is because of falling house prices and not just the payment shocks associated with adjustable-rate mortgages.
With the falling house prices, many borrowers owe more on their homes that their homes are worth, especially after making little to no down payments or taking second mortgages.
And in the end, payments are still going up for these borrowers, even if it isn’t as much as it was previously.
