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It’s been a while since I updated the mortgage interest rate chart.

As you can see, rates have crept downward since my last update and are now near their lows of late 2006.

This is good news for folks hoping to buy or refinance with traditional mortgages. However, it’s of little use to others. For instance, holders of low-initial-rate loans that were taken out in 2005 or earlier will still be facing a fairly steep jump in payments.

More generally, those looking to buy or refinance with exotic loans are much more beholden to loose lending standards than to rates. To this group, the fully indexed mortgage rate is often less important than the ability to make a low down payment, provide limited income documentation, or enjoy a nice low teaser rate. Exotic borrowers may find that the ongoing tightening up of underwriting standards is more than offsetting any decline in interest rates.

— RICH TOSCANO

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