Do teaser loans make more sense than regular floating rate products?
Interest rates are thought to have bottomed out and are widely expected to go up in July 2010 and these teaser loans provide a cushion at least for the next few years. After teaser period is over, if your lender does not offer you market determined floating rates, you should switch your loan to another lender. The effective rate of these teaser loans are also fairly good and hence it should clearly be preferred over regular floating rate loans which might increase rates next year itself based on current market conditions. So what should a consumer look at while choosing a lender based only on teaser rates? The big variable in most cases is the applicable floating rates after the initial period of fixed rates is over. In working out the effective rates it has been assumed that the floating rates will be what they are today. This may not necessarily be true as different banks may follow different strategies on floating rates at that time. Can existing home loan consumers take advantage o
