Without Loan Giants, 30-Year Mortgage May Fade Away
Friday, March 4, 2011 - 12:35 PM
Interest rates would rise for most borrowers, but urban and rural residents could see sharper increases than the coveted customers in the suburbs.
Lenders could charge fees for popular features now taken for granted, like the ability to “lock in” an interest rate weeks or months before taking out a loan.
Hanging in the balance are the basic features of a mortgage loan: the interest rate and repayment period.
One prominent investor, William H. Gross, the co-head of Pimco, the major bond investment firm, has estimated that he would demand a premium of three percentage points to buy such loans — a cost that would be passed on to the borrower. (bold mine)