equity home interest loan rate
CONSUMER WATCH: ARMs present some risks as rates increase
Lenders boost their home equity lines of credit nearly every time the Federal Reserve Board raises a key interest rate. Adjustable-rate mortgages are going up as well, though most have some built-in protections from fast-moving rate adjustments.
After four quarter-point Fed increases in 2006 alone -- a total of 17 consecutive increases since 2004 many consumers are in debt over their heads. More may be looking at foreclosures.
Mortgage delinquencies rose in the first quarter of 2006 over the same period in 2005, reported the Mortgage Bankers Association in Washington
"Additional modest increases in delinquency and foreclosure rates are likely in the quarters ahead," warned MBA chief economist Doug Duncan.
With every spike in the federal funds rate -- the rate banks charge one another for overnight loans -- banks respond by raising the prime rate, the interest rate they charge their best customers and the ones most often tied to home equity lines.
More equity home interest loan rate info
Sacramento Residents Reducing Home-Equity Loan Use
(AP) SACRAMENTO Sacramento-area residents have reduced their use of home-equity loans at twice the rate of Californians as a whole in the early months of 2006, according to a new report. After area home-equity borrowing hit $7.6 billion in 2005, it fell by about 10 percent between January and April this year, according to DataQuick Information Systems, a La Jolla-based housing consultant. Statewide, borrowing fell by half that amount -- about 5.2 percent. The company examined property records in eight counties in the Sacramento area, with the most extreme borrowing decline taking place in Sutter County -- a drop of 41.7 percent from early 2005 to early 2006. Home values in the area are significantly lower than they were during the second half of 2005, and interest rates are up. Analysts say these factors could be to blame for the diminishing market for home-equity loans.