For millions of homeowners, the cost of home ownership is suddenly spiking because they hold adjustable-rate loans. A report released Tuesday warns many may be unable to afford the increase.
Â
When interest rates hit historic lows in 2003 and 2004, consumers seized the chance to buy or refinance. Many pushed payments even lower by signing up for introductory rates that lasted two or three years. Plus, many selected interest only 100% loans for new home purchases. The industry touted such loans as a way to borrow more money than customers could otherwise afford.
 But the loans were simply agreements to pay less now and more later. In many cases, later is now here. The loans are adjusting for the first time. The Mortgage Bankers Association estimates $300 billion in mortgage loans will move to a higher rate this year, and an additional $1 trillion will rise for the first time in 2007.
 Homeowners who can’t afford the new payments will have to sell, or face foreclosure. Amid cooling demand for homes, and the back to back drop in home values in San Diego real estate, plus higher interest rates, experts fear foreclosure increasingly will be the only choice for most.
Search the entire San Diego MLS, visit brokerforyou. We also have a newer downtown San Diego real estate site plus San Diego for sale by owner and Palermo condos downtown San Diego
I would say from all I’m reading, that the San Diego foreclosure rate should be near or atdouble 2005 by November or December!
This will not be a happy holiday season for many San Diego homeowners.
Tad
Great Post! I just want to add that there are many who re-fied their homes with 95-100% loans over the past few years.
There people were using their homes equity as their personal bank. Personally, just on my block, at least two homeowners
did this(100% re-fi) about two years ago. So, the downturn will effect existing homeowners as well as new buyers.
Jane W.
I liked this site, it’s neat. Good job!
Yo! Cool stuff! Thanks for being here.
Nice site!
Great site.
I really enjoyed this page. I will be linking and I will be trying to read and research all that there is to offer from this site!
Good site, nice design!
I’m glad I found your site!
It seems that SD real estate follows about a 10 year boom to bust cycle; perhaps it takes 10 years for people to forget the last bust.
Chris
San Diego California Cosmetic Surgery