Will the mortgage crisis get worse?

By Adviseur Mijn

The economy is in dire straits, but some mortgage experts believe it will get even worse... The so called 'second wave' of the mortgage crisis is predicted to be even worse than the original subprime crisis. The circumstances are looking worse by the day, with unemployment rising, home prices going down and option ARM interest rates likely to boom in the coming months.

The housing market is far from normal. And considering the recent foreclosure boom, coupled with a spike in housing inventory becoming available, stability isn't likely to set in soon. The greater amount of inventory is causing home prices to drop.

Option ARM mortgage interest rates are predicted to go up, which will cause a whole array of problems on its own. Before the mortgage crisis, an option ARM mortgage was a great option for homeowners that wanted greater control over monthly payments.

With the current conditions however, the ARM interest rates are likely to go up in a big way, causing the monthly payments to increase greatly.

The lowering of housing prices make the problem even worse, because many homeowners will find them themselves with a large debt on a house that isn't worth nearly as much as they think. This fact, combined with increasing unemployment rates, may lead up to 'the perfect mortgage storm'.

About the Author:

Adviseur Mijn writes articles about mortgages in English and articles about spaarhypotheek and dure hypotheek oversluiten in Dutch.