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Mortgage rates rise in the US
Mon, 10 Apr 2006
In countries where considerable disparity of wealth exists between rich and poor, making housing affordable and accessible for lower-income families and individuals. In America, rising interest rates are causing many in this sector to struggle with their mortgage repayments, and many of their homes are in danger.

Many of this category of borrower got into the housing market recently after taking out an adjustable rate mortgage. Numerous adjustable rate mortgages have been released onto the market at low rates in order to attract customers. Some of these rates were reportedly half those of standard 30-year fixed rate mortgages. However, the low rates gave Americans with less money the chance to secure property, at a time when the housing market was very strong. In this period, homeownership rose to an enormous 70 per cent.

The figures are alarming though, with approximately a quarter of all home mortgages in the US carrying these adjustable interest rates, and the trend continuing. Last year, approximately 43 per cent of all mortgages approved were adjustable.

Unfortunately for many of these borrowers, the costs of maintaining a mortgage like this have risen substantially over the last two years. This coincides with the expiry of the introductory low rates on many of the loans.

Unfortunately, expert opinion is that the situation will get worse before it gets better. Concern exists amongst lenders that loans will begin to fail.

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