High Rates and <br />Risky Mortgages, Fuel Fears of Spike in, Foreclosures.<br />'Newsweek' reports that increased mortgage rates could result <br />in more homebuyers facing a higher risk of foreclosure.<br />According to the Mortgage Bankers Association, <br />applications for 5/1 adjustable-rate mortgages (ARM) <br />rose 32.5%, while loan rates reached the mid-6% range.<br />Last week, the total number of ARM <br />applications surged 15%, the highest <br />percentage since November of 2022.<br />At the same time, fixed mortgages <br />saw steady rate growth, <br />rising from 7.53% to hit 7.67%. .<br />While most mortgage rates increased<br />last week, rates on ARMs declined,<br />leading to an increase in ARM volume <br />and an increase in overall applications, Joel Kan, MBA Deputy Chief Economist, via 'Newsweek'.<br />The yield curve has become <br />less inverted in recent weeks, and <br />ARM pricing has certainly improved, Joel Kan, MBA Deputy Chief Economist, via 'Newsweek'.<br />'Newsweek' reports that, unlike fixed-rate mortgages, <br />ARM loans change to reflect current rates, meaning <br />foreclosure rates could increase over the coming years.<br />The risk to the buyers is that <br />eventually the rates will go up <br />and they may not be able <br />to afford the home, Rocke Andrews, Mortgage broker, via Realtor.com.<br />But prices are going up so quickly that, <br />if they wait, they may not be able to <br />afford the home. This is a way to get <br />into the home now and refinance later, Rocke Andrews, Mortgage broker, via Realtor.com.<br />According to a study from First American CoreLogic, <br />among 8.37 million ARMs, one in eight were estimated <br />to end in foreclosure, accounting for 1.1 million loans.
