Mortgage Rates Tumbling — Interest rate news from MortgageDaily.com
DALLAS, September 25 /PRNewswire/ Borrowers in exotic mortgages may get the chance to refinance into fixed rate loans, according to coverage of interest rates at MortgageDaily.com, the dominant source of online news for the mortgage industry.
Mortgage rates have been falling, with the 30-year fixed rate averaging 6.40 percent, according to Freddie Mac’s latest data. The decline appears to be maintaining momentum, with the 10-year Treasury yield falling to 4.59% Friday — its lowest level in more than six months.
The lower rates, which have recently stimulated refinance activity, are a boon for borrowers in nontradtional loans such as interest-only and option ARMs because of the opportunity to refinance at reasonably low fixed rates.
Exotic loans were the subject of congressional hearings last week.
Mortgage bankers told the Senate’s Subcommittee on Housing and Transportation and Subcommittee on Economic Policy that some borrowers have used nontraditional loan products “to purchase homes in markets where homes are quickly appreciating.” But the group warned the congressmen that suitability requirements being considered would not serve borrowers well.
The Federal Reserve’s Sandra F. Braunstein testified that nontraditional loans are not appropriate for everyone. “When monthly payments increase, sometimes substantially, consumers may face ‘payment shock’.”
Orice Williams of the Government Accountability Office echoed Braunstein’s sentiment.
“Lenders may have increased risks to themselves and their customers by relaxing underwriting standards and through “risk-layering,” which includes combining [alternative mortgage products] with less stringent income and asset verification requirements or lending to borrowers with lower credit scores and higher debt-to-income ratios,” Williams testified.
“No law or regulation should ever require any mortgage originator to supplant the consumer’s ability to decide for him or herself what is or is not an appropriate loan product,” the National Association of Mortgage Brokers told the lawmakers. “As the decision-maker, the role of the consumer is to acquire the financial acumen necessary and take advantage of the competitive marketplace, shop, compare, ask questions and expect answers.”
Read all stories about mortgage rates at https://www.mortgagedaily.com/Rates.asp
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Source: MortgageDaily.com
