In a conference call last Tuesday discussing the impact of current historically low rates on adjustable rate mortgages now being originated, Standard & Poor's has concluded that a rise in interest rates would not cause adjustable-rate mortgage borrowers to default on their loans.

The conclusions were based on an analysis of personal income growth along with different interest rate forecasts to pinpoint the degree to which some of these borrowers may be stretched in making future payments on their mortgages. S&P's premise was that if mortgage rates rise, there is the risk that borrowers who qualified under the initial mortgage rate could no longer pay the principal and interest payments. This, therefore, increases the possibility for defaults.

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