Home loans catch up to consumers,

From the Arizona Republic, reports that housing consumers who took out home equity loans and interest only loans are facing concerns over the higher interest rates and the slowing of the housing market. Almost 45 percent of all homes purchased in metro Phoenix through August were financed with interest-only loans, according to San Francisco based LoanPerformance. A growing number of people are so stretched that they are spending more than they earn. Valley homeowners who have already tapped most of their equity can't count on another huge run up in home values to get buy. Almost 34 percent of all Arizona homeowners were paying more than the recommended 30 percent of their income to cover their mortgages. The rampant run-up in housing appreciation has ended, and prices have even dropped in some areas. At the same time, inflation, interest rates and debt are climbing. The article states that if the equity party is over and homeowners can't afford to keep their primary or investment homes, or maintain their spending levels, it is bound to put a damper on the overall economy.

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