Many homeowners face rising loan costs

WASHINGTON, Aug. 30 (UPI) -- Millions of U.S. homeowners are getting the word that their subprime adjustable home loan interest rates are going up – possibly by 10 percent or more.

The least able to absorb the new payments, in some cases several hundred dollars a month more, could be forced to get relief or be nudged toward default, the Christian Science Monitor says.

The peak for resetting loans will be in October, when the rates on some $50 billion worth of mortgages are likely to rise by 2 percentage points or more.

For example, on a typical $210,000 loan balance, the additional 2.5 percentage point increase is estimated to add about $4,560 a year, or about $380 a month.

That means the median household would have to devote an extra 9.5 percent of income just to pay the extra interest, the report says.

Wall Street and the broader mortgage markets already have been rocked by the prospect of significant and growing losses because of rising foreclosures.