If rising interest rates cause more people to default on their adjustable-rate mortgages, investors could face a potential boon. Buying distressed properties — those that are in foreclosure or have a foreclosure pending — is one of the few opportunities to snag a bargain in this overheated real estate market.

Rising foreclosure rates would also mean an increase in REO inventories, larger portfolios for asset managers and lower returns as prices are pushed down. Of course, with interest rates still at near historic lows below 6 percent, a lot of this is just speculation.