Wednesday, September 26, 2007

Could the bottom be near?

Homeowner's paying $31.8 billion in subprime adjustable-rate mortgages began paying higher interest rates this month. This is the highest amount of subprime ARMs due to reset over a given one month period in this housing cycle. By the end of the year resetting ARMs are forecast to drop to $25.2 billion. By the end of 2008, this number will drop to $3.6 billion.

Interest rate resets have been a big factor in the increased number of defaults this year. As ARM resets reach a peak more homeowners will have trouble meeting payments. Could a record supply of homes for sale, combined with a peak in ARM resets mean the housing market may be near a bottom? Could a market turn up be next?

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