The question you need to ask yourself is, why would a bank be pitching you this product at this time The obvious answer is that bankers believe rates will rise in the future. Getting you out of a fixed loan and into a variable one helps ensure profitability on your account.
More Quotes from Keith Gumbinger:
For most home buyers, especially first-time buyers, taking a 15-year (or 20-year) mortgage is out of the question.Keith Gumbinger
The optimal thing to do is to lock in your interest rate.
Keith Gumbinger
Does that mean (consumers will) stop borrowing because it costs them another 5 a month Probably not. It may influence decisions. I don't think it halts decisions.
Keith Gumbinger
Fannie Mae and Freddie Mac will even lend 103 percent of the homes value, ... You need to have very good credit to qualify for this kind of loan.
Keith Gumbinger
Leveraging yourself out at a time when (home) prices are very high certainly could set you up for difficult times.
Keith Gumbinger
This would free up cash now, while still minimizing their exposure to rising rates during the period they expect to remain in the house.
Keith Gumbinger
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