La Jolla Real Estate, Del Mar Homes, Carmel Valley, University City and Downtown San Diego real estate,
homes and condos for sale in California - Ruth Mills & the Mills Team, REALTOR.






Sign Up For Email Updates
(includes all areas in San Diego County)





 In Lieu of warnings otherwise - customers continue to opt for riskier loans
In spite of the issuance of warnings issued by both federal and state regulators, borrowers are continuing to choose nontraditional loans. These types of loans pose the risk of an unstable payment structure that could increase rapidly throughout the term of the loan.


The Mortgage Bankers Association (MBA) reports that nearly 26% of loans in the 6 months of the year were loans given on an interest-only basis.

13% of the loans were ARM loans (adjustable rate mortgages.) These loans enable the consumer to choose their amount of payment.

These types of loans have been heavily marketed by lending organizations to potential customers as a more appealing method of dealing with the current housing market. Payment amounts on these types of loans fluctuate along with any changes in interest rates. These changes can cause a customer's payment to double, even triple as rates adjust and in turn reflect upon the unpaid principal balance. The unfortunate outcome of this is a rise in customers who are only able to make minimum payments on their loans.

What drives the marketing of these loans is consumer demand. The MBA reports that consumers tend to respond to the different loan options that are currently being offered, and it seems as though the loans that are being offered are serving the current consumer need.

Back to Real Estate News