Lack of Equity, Rising Rates Will Leave Many Homeowners Stranded

But the real sleeper is the number of first time home buyers who are over-leveraged at extremely low "teaser" rates, and whose mortgages are due to be renewed in the next 12-24 months.


Here are some sobering statistics recently highlighted by MSN Money Central

- Nearly 10% of Us households with a mortgage had zero or negative equity in their homes as of September 2005.

- 5% of home borrowers were in negative equity by 10% or more.

- Of those who bought or refinanced their homes in 2005, 29% had zero or negative equity, and 15.2% were in the red by 10% or more.

- About 25% of all mortgage loans outstanding -- trillion -- are scheduled to be renewed at higher interest rates this year and next. Homeowners who went for low teaser rates could be facing a doubling of their payments.

- In the U.S., 117,259 properties were in some stage of foreclosure in February, up 68% from a year earlier.

- 43 percent of first-time home buyers made no down payment last year in 2005!

- Of borrowers with initial interest payments of 2.5 percent or less 22% have negative equity and 40 percent have less than 10 percent equity.

Does this sound like a disaster waiting to happen?

Yes it does, and you can be sure that it is the greedy banks and mortgage companies who are the worst culprits -- and ultimately the ones likely to be hurt the least.

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source: linknet-news.com