Easy money has dried up in most home markets
Rising interest rates, of course, don't hurt homeowners with fixed-rate loans, or the 34% of homeowners whose properties are paid off. In fact, in the second quarter, the delinquency rate for all loans combined was just 4.4%, down slightly from the first three months of the year, though up a little from the second quarter of 2005, the MBA says. And the figures are still low compared with four years ago, when the nation was emerging from a recession.
ARM defaults, especially among those with subprime credit, are likely to raise the national figures in coming months. In 18 states, more than 15% of homeowners with subprime ARMs were behind in their payments in the second quarter.
|Housing market forecast worsens |
Stubborn sellers, excess supply send sales plunging
|For some, renting makes more sense |
|Mortgage payments exploded during real estate boom, but rents haven't kept pace, often running half as much as what homeowners pay|
Though [Micki Seibel] and [Jan Leger] love their home, which they bought in 2002 for about $1 million, it's been draining them of $5,600 a month for their mortgage and taxes, when they could be renting a place just as nice in the same neighborhood for about $3,400. "We can put that savings in the bank and make it work for us and take away the risk of the unknown future of the real estate market," Seibel notes.
That's still not enough to persuade Seibel and Leger to keep their home there. "We've been watching the rents," Seibel says. "But for what we're paying for our mortgage and property taxes, we could be renting a mansion in Pacific Heights."