washington home equity loan
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.
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Report: Borrowing Against Your Home More Expensive
Washington, DC (AHN) - It's getting more expensive for customers to borrow against their homes as the Federal Reserve continues to raise interest rates. The Federal Reserve in late June voted to raise short-term interest rates for the 17th consecutive time.
Currently, interest rates are at 8.2 percent. That's an increase from 8.01 percent the week earlier and the highest since March 2001 when the rate was 8.25 percent.
Analysts say a year ago, equity lines of credit were an average of 6.38 percent. Two years ago, it was 4.83 percent.
There are several alternatives for consumers. You can pay down the lines of credit, or shift to a fixed-rate home equity loan. The home equity loan may be the way to go since they're averaging 7.8 percent.
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