Federal Group Says Home Costs Outpacing Personal Income

Denver (AP) A federal report says Coloradans are taking on
bigger and riskier mortgages because home prices have risen much faster than incomes in the past decade. The Federal Deposit Insurance Corporation says home costs outpaced per capita personal income by 32% between 1994 and 2004.

Most of the gap opened after 1999, when home prices kept
rising despite a leveling off in incomes. F.D.I.C. Regional Manager Alan Bush says Colorado residents carry some of the highest debt–versus–income levels in the country.

Last year, the state was second in the nation in the percentage of borrowers using adjustable–rate mortgages and fourth in interest–only mortgages.

Both A.R.M.'s and interest–only mortgages reduce payments, but leave borrowers vulnerable to rising interest rates.

Copyright 2005 by the Associated Press. All rights reserved.
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