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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: nextrade! who wrote (22341)	7/19/2004 10:04:37 PM
From: nextrade!	Respond to of 306849

a record one-in-73 U.S. households declared themselves illiquid nypost.com July 18,2004 RATE RISE COULD BANKRUPT DEBTORS By DIANE HESS Four years of rock-bottom interest rates may have stimulated the economy, but now they threaten to drive millions of Americans into bankruptcy. Since 2000, a series of Federal Reserve rate cuts has made borrowing dangerously easy. Low-rate mortgages, credit cards and auto loans have allowed the average American to live above his or her means. Now that rates are rising again, it's going to become that much more difficult to fix the mess. "Many families are just a few paychecks away — about three to six months — from having severe problems," said Sam Gerdano, executive director of the American Bankruptcy Institute. In 2003, a record one-in-73 U.S. households declared themselves illiquid, ABI data show. That's more than 1.6 million new bankruptcy cases in 2003 alone, and nearly double the number from a decade ago. ABI predicts that 2004 will be another record year for personal bankruptcy. Madeline Rodriguez, of Richmond Hills, Queens, knows the story all too well. The 49-year-old mother of one filed for bankruptcy recently. "For the past few years, it was so easy to get credit cards," she said. "I got them in the mail or at department stores, and I went shopping. It's not something that I'm proud of." U.S. households, on average, have more than $6,000 in credit card debt, according to BankRate.com's calculations of first-quarter census figures and the Federal Reserve's debt statistics. As rates go up over the course of the next few years, the cost of borrowing and size of payments on those loans will only move higher. Homeowners with adjustable-rate mortgages — which vary according to interest rates at specified intervals — could be among the hardest hit. Spending on adjustable rate mortgages totaled approximately $300 billion, or 35 percent, of the nearly $850 billion spent on mortgages — both purchases and refinancings — from April through June, according to data released by the Mortgage Bankers Association this week. "Significant rate adjustments could lead to greater instances of delinquency and default on other debts," said Greg McBride, an analyst with BankRate.com.