The Squeeze on Housing Payments

Are suburban governments facing a crisis as interest rates rise on the adjustable rate and subprime mortgages that have helped fuel the hot housing market? 

A recent study by First American Real Estate Solutions projects that about one in eight households with adjustable-rate mortgages that originated in 2004 and 2005 will default.  And even if a borrower doesn't default, resets will eat into discretionary spending.

At most risk are homebuyers who purchased their property in 2004 or later.  They haven't been in their homes long enough to realize any gains, and with markets cooling, are not likely to in the short run.

You think taxpayers resist property tax increases now?  Just wait until they get those new mortgage bills.  Things may get very surly.

  

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