Adjustable rate mortgages sounded good at the time, but now all those low interest rate loans are steadily rising and putting the pinch on a larger number of homeowners.
“While interest rates are expected to be flat or up slightly in 2007, there are roughly $500 billion in outstanding adjustable rate mortgages that will see a monthly payment increase due to an interest rate re-set, the start of amortization, or both,” said Amy Crews Cutts, Freddie Mac deputy cheif economist.
“Other homeowners have second liens that adjust each month depending on changes in the prime rate,” she said, and Freddie Mac expects that many borrowers facing payment increases this year will refinance those loans.

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