Lenders try to keep mortgage boom alive
Hoping to ride a new wave of profits as the mortgage boom winds down, lenders have changed course and are targeting borrowers with adjustable-rate mortgages and encouraging them to refinance into fixed-rate loans.
Many lenders have been pushing adjustable-rate loans as a way for borrowers to keep their monthly payments down, stretch their budgets to afford a bigger house and use their home equity to get cash. Now, with short-term interest rates having moved up much faster than long-term rates, lenders are rediscovering the marketing appeal of fixed-rate mortgages. Currently, a 30-year-fixed rate loan carries a 6.27 percent rate, according to HSH Associates, while a one-year ARM, which adjusts annually, has a 5.39 percent rate.