5 Loan Products Lenders Can Turn to When Rates Rise
Published December 27, 2016 2:01 PM
1 Min Read
Rising interest rates typically squelch demand for refinancing, leaving lenders to compete for homebuyers' business. But plain-vanilla purchase loans aren't the only saleable products in this rising-rate environment. Here are five other products likely to find demand.
Down Payments That Remain Low as Rates Rise
A growing number of loan programs allow borrowers to put down as little as 3%, which doesn't leave much of an equity cushion, but helps maintain affordability as rates rise.
Loans that Keep a Home on the Range Affordable
Rural homebuyers may qualify for government loans that require less upfront investment than home mortgages found in the broader market. Loan volume in this market has been steady.
Can't Move? Improve
When consumers can't afford to buy a new home, they often take out a loan to improve the one they have. Remodeling spending is expected to grow through early 2017.
Piggyback Loans (If Practical)
Loans that allow borrowers to finance their down payment can help improve affordability when rates rise, but remember that they proved to be a risk during the last downturn.
Mortgages Made Outside the QM Box
Lenders' liability for consumers' ability-to-repay increases for loans that don't fit in the qualified mortgage rule's box, but non-QM loans also could help lenders reach more borrowers as rates rise.
