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U S Homeowners Starting To Feel The Pinch Of Higher I R

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http://www.builderonline.com/industry-news...rticleID=288843

Adjustable Rates Catching Up

Source: Standard-Examiner

Publication date: 2006-04-16

By Jeff DeMoss, Standard-Examiner, Ogden, Utah

Apr. 16--OGDEN -- When Cory Bailey bought his first house a little more than three years ago, he obtained a $150,000 mortgage with an interest rate of about 4 percent.
Last November, his rate jumped two percentage points, boosting his monthly payment by almost $100 overnight.
Like many Utahns during the housing boom of recent years, Bailey was drawn to the low cost of getting into his own home by way of an adjustable-rate mortgage loan.
"I knew it was coming, but it's still a shock for someone who doesn't have a lot of extra money laying around," said Bailey, who works for a local manufacturer.
With a current average of about 6.5 percent, long-term fixed-rate mortgage loans remain historically low. But many who entered into adjustable-rate mortgages in recent years, when short-term rates fell as low as 3 percent,
are starting to see payments skyrocket
.
As the Federal Reserve continues to raise its key borrowing rate to combat inflationary pressures, homeowners with adjustable rates are likely to see their monthly payments increase -- if they haven't already.
"Depending on what type of loan you have,
your rates can go up 4 (percent) or 5 percent at a time
," said Branden Hansen, senior vice president of mortgage lending at Ogden-based Bank of Utah.
"It's almost a mortgage crisis waiting to happen."

The UK is in a similar position without 30 year fixed rate loans to turn to for shelter. Its going to get very ugly when the bubbles in the US and UK begin to impload.

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Businessweek sends out a warning to HPI optimists:

http://uk.biz.yahoo.com/20042006/244/housi...ks-rickety.html

Thursday April 20, 01:26 PM
Why Housing Looks Rickety
By Peter Coy
Is the housing market safe from higher mortgage rates?
The bottom line: Homeowners enjoyed an amazing windfall from price increases over the past five years. But with rates on the upswing, it looks like rough times are ahead.

:o

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Businessweek sends out a warning to HPI optimists:

http://uk.biz.yahoo.com/20042006/244/housi...ks-rickety.html

Thursday April 20, 01:26 PM
Why Housing Looks Rickety
By Peter Coy
Is the housing market safe from higher mortgage rates?
The bottom line: Homeowners enjoyed an amazing windfall from price increases over the past five years. But with rates on the upswing, it looks like rough times are ahead.

:o

The interesting bits are here

Hold the celebration, though. The rise in rates may not be coming to an end. On Apr. 19, the government reported a bigger-than-expected 0.3% March increase in the consumer price index, excluding food and energy, stoking fresh inflation fears. Yields on Treasury notes, which had dipped below 5% on Tuesday, climbed right back above 5%, and the S&P Homebuilders index gave up most of its Tuesday gain.

The Fed may not stop after just one more rate hike in May, despite the hints in the March meeting minutes. And even if the Federal Reserve does pause in raising the short-term rates that it controls, long-term rates may well keep rising anyway. That would happen if buyers of Treasury bonds and mortgage-backed securities get nervous about the Fed's commitment to inflation-fighting and sell. When bond prices fall, interest rates automatically rise. And borrowers, including home buyers, pay the price.

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  • 338 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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