8% to 13% will tip a lot of people!
In Credit Crisis, Large Mortgages Grow Costly
By FLOYD NORRIS and ERIC DASH
Published: August 12, 2007
When an investment banker set out to buy a $1.5 million home on Long Island last month, his mortgage broker quoted an interest rate of 8 percent. Three days later, when the buyer said he would take the loan, the mortgage banker had bad news: the new rate was 13 percent.
“I have been in the business 20 years and I have never seen” such a big swing in interest rates, said the broker, Bob Moulton, president of the Americana Mortgage Group in Manhasset, N.Y.
“There is a lot of fear in the markets,” he added. “When there is fear, people have a tendency to overreact.”
The investment banker’s problem was that he was taking out a so-called jumbo mortgage – a loan greater than the $417,000 mortgage that can be sold to the federally chartered enterprises, Freddie Mac and Fannie Mae. The market for large mortgages has suddenly dried up…..