Will the mortgage crisis get worse?

The economy is going through very rough times right now, but experts believe it will get even worse. They predict a second wave of the mortgage crisis, this second wave being even more severe than the subprime mortgage crisis. With rising unemployment numbers, housing prices going down and housing inventory going up, the circumstances are looking bleak indeed.

The housing market is still not up to normal and it’s not getting better anytime soon. Prices are dropping almost daily. This could mean a big foreclosure boom in the next couple of months. The next victims of this crisis will probably be the option ARM mortgages.

Option ARM mortgage interest rates are predicted to go up, which will cause a whole array of problems on its own. Before the mortgage crisis, an option ARM mortgage was a great option for homeowners that wanted greater control over monthly payments.

With the current conditions however, the ARM interest rates are likely to go up in a big way, causing the monthly payments to increase greatly.

Because of lower home prices, many people will discover they owe a big debt on a house that’s worth a lot less than they think. Combine this with higher unemployment rates, and a second tidal wave of the economic crisis is on the horizon.