It’s a better loan for the borrower. The rate is locked for the longer period. The subprime push of 2 year loans wasnt intended to be a long term loan, but it’s sad how many prime borrowers that should have long term fixed loans are in these sp’s with a prepay that will need to refi.
For short term borrowers or hopeful flippers, they don’t need a 5 YR. Every situation is different.
The intent of a 2YR loan was a band aid. It turned into a crutch.
There is a sp loan today that prices out better than a prime loan. At 65% LTV 5 YR ARM for 5.75%, but it comes with a 3 YR prepay, and you need a 700+ credit score. Less risk to the lender @65%. It’s cheap money today, but only for 5 yrs.
Of course the 90% will restrict many people from qualifying. There are lenders still loaning up to 100%, it’s the qualifying that is more difficult….
