The Federal Reserve hiked interest rates again this month. The Fed has been jacking up rates for all of 2022 to tame inflation. While there are concerns that raising interest rates may lead to more foreclosures, the government body has likely concluded that stopping inflation in its tracks is more critical.
The concern about more foreclosures is valid. In 2022 mortgage lenders foreclosed on 20,750 homes so far. This is a 113% increase since the beginning of 2020. In addition, MarketWatch reports that foreclosure starts increased 219%.
Learn more below about how interest rate hikes often cause more foreclosure. If you are at risk of foreclosure, please contact Cook County real estate attorneys at Orlowsky & Wilson for assistance.
Most homeowners have fixed-rate mortgages, so why do interest rate hikes cause more home foreclosures? However, studies show that homeowners may face more economic challenges in rising interest rate environments. These issues can lead to more spending, more debt, and consequently, a higher foreclosure rate.
Additionally, the US has enjoyed bargain-basement mortgage rates for years. Low rates have been a boon for loan modifications that often prevent foreclosures. Banks have been able to modify mortgages with lower interest rates, reducing payments. These actions often help to keep families in their homes.
However, with mortgage rates topping 6%, many fewer modifications can be done today. In addition, some homeowners are trapped in mortgages they cannot pay, so foreclosure rates have ticked up.
If you’re at risk of foreclosure, what should you do? First, remember that most mortgage companies don’t want to foreclose unless there’s no other choice. Foreclosures are expensive for lenders. These tips:
Are you going through a foreclosure? Or, do you worry about being behind on your mortgage and losing your home? The Cook County real estate attorneys at Orlowsky & Wilson can help.
Orlowsky & Wilson has more than 30 years of experience helping Cook County families with residential and commercial real estate transactions. Our attorneys also work with clients in Lake County, Chicago, Libertyville, Northbrook, Gurnee, Glenview, Grayslake, Lake Zurich, Lake Forest, Buffalo Grove, Vernon Hills, Highland Park, Wilmette, Deerfield, Arlington Heights, and Wilmette. Contact our Cook County real estate attorneys at (847) 325-5559 if you need assistance.