The portfolio to be acquired consists primarily of adjustable rate loans
and has a current weighted average coupon of 7.30%.
'Higher debt repayments may hurt asset quality, especially for borrowers on adjustable rate loans
. However, we expect such effects to be limited in the near term.
The reason for the increase was primarily due to upward repricing for adjustable rate loans
in addition to higher interest rates on new fixed rate commercial loans in a rising interest rate environment.
The seven-year, Freddie Mac, adjustable rate loans
are secured by a 78-property portfolio of independent living facilities located in 30 states across the country.
The second release will also allow Fannie Mae to use the platform to issue securities backed by adjustable rate loans
Because most subprime loans carried adjustable rates, the article focuses on the mandated disclosures for adjustable rate loans
. Since by definition adjustable mortgage loan rates and monthly payments vary from time to time with fluctuations in interest rates, it is impossible for the disclosure forms provided at the closing to state what the payments will be once the loan reaches the first date when the rates and payment amounts change.
They'd most likely prefer shorter term, adjustable rate loans
, which shift more of the interest rate risk onto the borrower.
For adjustable rate loans
, approximately 74 % have a teaser rate (an initial interest rate below the fully adjusted rate (8)) which, on average, is approximately 1.9 percentage points below what the fully adjusted rate at origination and expires after 31 months.
Yacht mortgages bear a passing similarity to home finance, being available in a variety of fixed and adjustable rate loans
over a relatively long period - generally up to 10 years.
Lower interest rates may help a bit on monthly payments for those with adjustable rate loans
, but the principal payment still has to be made.
As a consequence, borrowers were unable to refinance their adjustable rate loans
as the monthly payment amounts started to jump.