Is the mortgage crisis getting worse?

By Adviseur Mijn

The economy is going through very rough times right now, but experts believe it will get even worse. They predict a second wave of the mortgage crisis, this second wave being even more severe than the subprime mortgage crisis. With rising unemployment numbers, housing prices going down and housing inventory going up, the circumstances are looking bleak indeed.

The housing market is still not up to normal and it's not getting better anytime soon. Prices are dropping almost daily. This could mean a big foreclosure boom in the next couple of months. The next victims of this crisis will probably be the option ARM mortgages.

With the option ARM mortgage interest rates likely to go up soon, we might be seeing another boom in foreclosures in the following months.

Before the mortgage market blew up, option ARM mortgages were a great option for homeowners that wanted more control over the required monthly payment. However, with the current market conditions, option ARM interest rates are likely to spike. This will cause a surge in the required monthly payment for homeowners. The added burden of a couple of hundred dollars in extra mortgage payments may be too large for many households.

With home prices going down, many homeowners will soon discover that they owe a large debt on an asset that isn't worth nearly as much as they believe. These facts, along with rising unemployment rates may lead up to a second stage in the mortgage crisis.

About the Author:

Adviseur Mijn writes articles about mortgages in English and articles about beleggingshypotheek and oversluiten hypotheek rente in Dutch.