Bad Credit Online Magazine - Daily News and Advice on Credit, Debt and Mortgage : Does high number of interest-only adjustable mortgages indicates coming housing bubble?

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August 08, 2005

Does high number of interest-only adjustable mortgages indicates coming housing bubble?

Some people think so. You can read all of it in The Coloradoan, but here are the main points:
1. The number of interest-only mortgages and ARMs are on the rise.
2. In some cities interest only mortgages have taken over 40% of the market.
3. Option ARM loans are very popular. These are the loans that offer options such as negative amortization, interest only payments and flexible amortization period, now up to 40 years.
4. The number of refinances are still rather high, even with interest rates steadily inching higher. More than often those are cash-out loans for the sake of debt consolidation.

The bottom line is that banking and mortgage industry have been going out the way to come up with more affordable products. Plus, it is much easier to qualify today for a home mortgage. Stated Income, Stated Assets and True No Doc loans will get everyone a mortgage. It has fueled home prices even further. Is bubble nearing the breaking point?

Posted in Real Estate at August 8, 2005 05:01 PM

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