Foreclosures at Half Decade High

It used to be that, if a homeowner was in financial trouble, they could refinance their home and avoid foreclosure. In the current market, financial trouble is resulting more and more in foreclosure. The rise of foreclosure over the last five years has been worrying many agencies and analysts alike, with good reason. The year of 2006 can boast the most foreclosures in 52 years, with 1% of current homeowners in the pre-foreclosure or foreclosure process.

High mortgage rates, decreasing home values and high fuel costs are all contributing factors to the devastating increase in foreclosures. Early this year, many homeowners were hoping to refinance out of adjustable, or “exotic,” mortgages, but were kept from doing so due to high mortgage rates or low home values. The rise of fuel costs in the same months reduced many families’s disposable income, making the chance of foreclosure higher. Analyst are hoping that the current relief in mortgage rates, as well as dropping fuel costs, will make the end of 2006 better than the beginning when it comes to the number of foreclosures.