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NASHVILLE, Tenn. (WSMV) – As interest rates go up, some real estate agents and mortgage brokers are encouraging home buyers to get riskier types of mortgages.
The trend is eerily similar to what happened before the 2008 financial crisis.
One of these mortgages is called the 2-to-1 buy downs. It artificially lowers rates for the first two years of the loan.
Another type of loan being promoted is an “Interest Only Mortgage,” where you pay lower monthly payments for several years by only paying interest.
Both loans can cause monthly payments to balloon by hundreds of dollars after the introductory period, causing many to default on their loans, as we saw in the last housing market crash.
Some industry experts believe it is unlikely we will see a repeat of that crisis because of regulations put in place, and because of the high standards required to qualify for a mortgage.
According to Freddie Mac, the current average rate for a 30-year fixed mortgage was 6.92 percent…more than double last the rate from last year.
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