They fail to grasp the potential benefits of a long-term fixed-rate loan because they do not understand risk properly.
According to the financial information service Moneyfacts, the average cost of a two-year fixed-rate loan, for someone with a 25% deposit, is currently 4.28%.
It allows a homeowner to refinance her mortgage with a low-interest, fixed-rate loan, even if she owes more than her home is worth.
FORBES: Refinance Your Mortgage (Even If You Have No Equity)
But with the Bank rate unlikely or unable to fall further, new home loan demand is shifting back to fixed-rate deals, rather than mortgages which track the Bank rate.
The CFPB is concerned that some loan officers may be promoting fixed-rate, lump-sum reverse mortgages over adjustable-rate loans.
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Mortgage buyer Freddie Mac said Thursday that the average rate for the 30-year fixed loan rose to 3.57 percent from 3.54 percent last week.
Rates for 15-year fixed-rate mortgages, often a popular option for refinancing a loan, fell to 5.53%, from 5.60%.
One drawback of a fixed-rate reverse mortgage is that you have to draw down the entire loan amount up front and pay interest on the entire amount across the life of the loan.
In recent days, Iceland has taken over the country's second-biggest bank, fixed the exchange rate of its plummeting currency, and asked Russia for a euro4 billion loan as it scrambled to stop the collapse of its economy.
With that promise in hand, the bank would make the purchase and immediately sell it onto the buyer at a mark-up, agreeing the buyer could pay, say, three months after goods are delivered--in effect, trade finance at a fixed rate with legal protection against default on the one side and loan sharking on the other.
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