Interest Party Ends For Homebuyers

Capitol Commerce, the once booming low interest lender who rode the refinancing wave was bust, leaving brokers without commissions and, as CBS News Correspondent John Blackstone reports, first time homebuyers without homes.

Brokers carried boxes away filled with the broken dreams of would-be borrowers who believed they'd locked in historically low mortgage rates.

Natalie Lee is eight months pregnant and has a little over four weeks to go. She and her husband Al are supposed to be moving into their home this weekend. Now the Lees are searching for a new mortgage that's sure to cost hundreds of dollars more each month.

"It's a little disturbing to see it tick up every day," says Al Lee.

Mortgage rates have risen from below 5 percent to over 6 percent just since June. That pushes payments up more than $100 a month on the average mortgage.

"This is one of the sharpest, quickest spikes that we have had in this country in at least 50 years," says Roger Ely, a financial analyst.

The spike meant Capitol Commerce couldn't live up to the low rates it promised customers they had locked in weeks earlier.

"They got caught short and its going to happen in other situations," says Ely.

And that can cause an alarming domino effect.

"We were just on top of the world, and then the world came crashing down around us," says Bonnie Kaufman.

She and her husband Jeff packed up thinking they'd sold their house.

"We were within 26 hours of loading the truck," she says. "We sold our refrigerator, we sold our couch, we sold our furniture."

But the buyer's mortgage collapsed along with Capitol Commerce.

"It's so easy for them to say, 'Oh well, we'll just go out of business,' and people like us sit out here with our lives, you know, totally jumbled up."

For the millions who have bought homes or refinanced as rates went down, analysts point to the fate of Capitol Commerce as a definitive sign the low interest party has ended.