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Mortgage Rates 'Turned On Their Head'

  • April 23rd 2009

by Mark Wellborn

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Mortgage Rates 'Turned On Their Head': Figure 1

For the first time since 1984, adjustable rate mortgages have higher interest rates than fixed-rate mortgages, according to The Washington Post. A recently released Freddie Mac survey shows that mortgages that adjust in one year have been more expensive over the last two weeks, averaging 4.82 percent compared with 4.8 percent on a 30-year fixed rate loan.

Traditionally, fixed-rate loans were more expensive because lenders took on more risk by financing it. But now things are different.

From The Post:

“The landscape has changed. The mortgage market collapsed. Investors lost their appetite for adjustable loans, which have been closely tied to soaring foreclosure rates. And the Federal Reserve adopted policies aimed at driving mortgage rates down.”

This article originally published at http://dc.urbanturf.production.logicbrush.com/articles/blog/mortgage_rates_turned_on_their_head/835.

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