Mortgage rates are easing, but monthly payments may not

Mortgage rates are beginning to ease slightly, with the 30-year fixed mortgage rate hovering around 6.86%. Will Americans with mortgage payments reap the benefits?

Yahoo Finance Reporter Dani Romero joins Wealth! to explain why mortgage rates may be easing but monthly mortgage payments may be rising for thousands of homeowners.

For more expert insight and the latest market action, click here to watch this full episode of Wealth!

This post was written by Nicholas Jacobino

Video Transcript

Mortgage rates have come down recently still remaining near that 7% level but easing in the last few weeks, but for many homeowners, they could soon see their monthly payments rising.

Yahoo.

Finance reporter Danny Romero is here with why, why, why are you doing this to them?

Danny Brad.

A shockwave may be coming for many homeowners.

Data from Intercontinental Exchange shows that more than 100,000 loans will reset in the next 12 months.

Now these are homeowners that have an arm loan and adjustable rate mortgage loan which can offer temporary relief for homeowners who want to avoid paying higher mortgage rates.

But they also come with the risk.

Homeowners have a fixed period usually between 57 or 10 years.

Then the rate on an arm loan adjust based on market conditions.

Now, due to rates staying high, many arm loan holders are experiencing an unpleasant shock of higher monthly housing payments.

About 1.7 million homeowners have bought homes with an adjustable rate mortgage since 2019.

And that's according to data from Intercontinental Exchange.

Now, remember an adjustable loan can make sense for home buyers comfortable taking risks of interest rate increases or those who plan to move and refinance before that fixed rate expires.

Now, it's also very key to pay close attention to those details of your loans.

Otherwise things can really turn ugly.

Brad.