No free ride for subprimers

The latest efforts to help the sub prime borrowers may cause dissatisfaction with many prime borrowers. In a way, they are right. Their frustration is right as two points can be raised-
1. The subprime borrowers received help which will create a condition where they don’t have to live up to the agreement they have. But the prime borrowers have to live up to their agreement.
2. The mortgage rate of a prime borrower may come close to the introductory rate of some subprime borrower. This may happen when the adjustment of the mortgage rate is done. As the mortgage adjustment is done every six month or every year, the rate of a prime borrower may increase but the mortgage of a subprime borrower will remain steady.

This does not mean that every sub prime borrower is enjoying the benefits. There are thousands waiting in queue. As a subprime borrower you may be punished and have to wait, because of your irresponsive credit behavior in the past. You started with a higher rate and still you pay a higher rate.

There are almost 2 million subprime borrowers are in problem because their ARMs are going to reset to higher points in 2008 and 2009. But presently only 150,000 to 240,000 subprime borrowers will be eligible for the freeze. The freeze will be available for borrowers who will face a more than 10 percent increase in the mortgage rate. But even after getting the freeze, the monthly installments will be higher than that of the prime borrowers.