Rising Interest Rates Fuel Home Mortgage Blow-Outs

June 10, 2007 (LPAC)--The effect of raising interest rates on the extensive number of Adjustable Rate Mortgages (ARMs) across the United States, is that of gasoline to a fire. ARMs re-set periodically, as interest rates change. Over the next five months, from June to October, an estimated $100 billion of ARMs will be re-set for sharply higher payments, according to a review in the June 10 New York Times . Home mortgage interest rates might hit 11 percent on these borrowers, who are mostly all in the high risk, "sub-prime" category. The payment shock will fuel delinquencies and foreclosures, already on the increase. Last year saw 1.2 million home foreclosures according to the data service, RealtyTrac. Over the next five years, an estimated $1 trillion worth of ARM loans are to re-set--a mortgage blow-out underway.