Due on Sale and Rising Interest Rates

[Kyle Cortez]

This is my first post but I have been reading a lot about "Due on Sale" clauses. For years now lenders have rarely enforced them (although it has happened). One of the initial reasons why these clauses were created was that during times of rising interest rates lenders could force you to refinance at the currently higher rate (more money for the banks). Interest rates have been falling since the 1980s, and so this generally has not been an issue. In the past 3 months interest rates have risen twice, and several sources say they will only continue to increase for the rest of the year. While this isn't great news for real estate investors in general, this could have interesting effects on the "Due on Sale" clause.

If banks begin to think they could make money by forcing to people to refinance they may well start enforcing the clause again. This could potentially increase bank revenue by a great deal. There are tons of people on this site who have violated this clause that was previously no big deal. Is anyone concerned that things could change if rates truly do continue to increase? I imagine the number of investment properties that banks could force a refinance on (at a higher rate) could be fairly high.