Mortgage Rates Hit Multiyear High: Who Goes Bankrupt First?
Mortgage rates are at the highest they’ve been in years – and it’s not just homeowners feeling the crunch. The financial health of America’s second-largest industry is on the brink, with various lenders, financiers, and debt collectors covering their bets by declaring bankruptcy.
The nation’s housing market has been in a roller coaster of upswings and downturns for years. But recently, an alarming trend has emerged. Rates for 30-year fixed and 15-year fixed mortgages have been steadily climbing, with banks unwilling to fall in line with the Federal Reserve’s cuts to other interest rates.
For many Americans, this is good news. After all, with interest rates standing at historic lows, it’s a fantastic time to buy a house – especially for first-time buyers. However, for those already carrying significant mortgage debt, the situation is quite dire. As rates rise, monthly payments on these loans become increasingly prohibitive – and the longer-term prospects become even bleaker.
But that’s not all. The high rate of mortgages is taking its toll on the country’s second-largest industry, real estate. As noted by the DP Trading Room’s CEO, Thomas Newton, “inflated mortgage rates are driving up the risk of default, especially on property types that don’t always have enough equity to cover the loan balance.” This means that entities such as real estate investment trusts, lenders, financiers, and debt collectors could be some of the first to go bankrupt from rising mortgage rates.
According to analysts, this could be further exacerbated by small businesses – who haven’t been extended much support from the government – defaulting on their commercial loans, as well as a declining residential rental market.
At present, it’s impossible to say who will be the first to file for bankruptcy under these growing economic pressures. But one thing is certain: the nation’s rising mortgage rates are changing the landscape of America’s second-largest industry and threatening the financial security of many.
Mortgage Rates Hit Multiyear High: Who Goes Bankrupt First?
Mortgage rates are at the highest they’ve been in years – and it’s not just homeowners feeling the crunch. The financial health of America’s second-largest industry is on the brink, with various lenders, financiers, and debt collectors covering their bets by declaring bankruptcy.
The nation’s housing market has been in a roller coaster of upswings and downturns for years. But recently, an alarming trend has emerged. Rates for 30-year fixed and 15-year fixed mortgages have been steadily climbing, with banks unwilling to fall in line with the Federal Reserve’s cuts to other interest rates.
For many Americans, this is good news. After all, with interest rates standing at historic lows, it’s a fantastic time to buy a house – especially for first-time buyers. However, for those already carrying significant mortgage debt, the situation is quite dire. As rates rise, monthly payments on these loans become increasingly prohibitive – and the longer-term prospects become even bleaker.
But that’s not all. The high rate of mortgages is taking its toll on the country’s second-largest industry, real estate. As noted by the DP Trading Room’s CEO, Thomas Newton, “inflated mortgage rates are driving up the risk of default, especially on property types that don’t always have enough equity to cover the loan balance.” This means that entities such as real estate investment trusts, lenders, financiers, and debt collectors could be some of the first to go bankrupt from rising mortgage rates.
According to analysts, this could be further exacerbated by small businesses – who haven’t been extended much support from the government – defaulting on their commercial loans, as well as a declining residential rental market.
At present, it’s impossible to say who will be the first to file for bankruptcy under these growing economic pressures. But one thing is certain: the nation’s rising mortgage rates are changing the landscape of America’s second-largest industry and threatening the financial security of many.
