It would be ARMs (Adjustable Rate Mortgages) that are among the higher risk on this front. You often see them as 5 or 7 year fixed terms that then shift to variable interest rates for whatever the remaining term is, they play off people's gambling mindset of 'well, I'm absolutely going to refi before the fixed term runs out'. The banks offer those loans for a reason; enough people fail to refi in time they make out like bandits after.
Like any kind of mortgage they're a tool with a purpose, but people get convinced to over-borrow or do risky things they probably shouldn't all the time. Practically speaking, this will largely mean both the ability to borrow going forward for any reason will become more expensive and harder to secure, because underwriting standards are going to tighten. Risk of default is higher, investors in Mortgage Backed Securities (or any debt security) are going to change which kinds they buy into based off it. The lenders will not want to make loans they can't sell, and the market adjusts.
It would be ARMs (Adjustable Rate Mortgages) that are among the higher risk on this front. You often see them as 5 or 7 year fixed terms that then shift to variable interest rates for whatever the remaining term is, they play off people's gambling mindset of 'well, I'm absolutely going to refi before the fixed term runs out'. The banks offer those loans for a reason; enough people fail to refi in time they make out like bandits after.
Like any kind of mortgage their a tool with a purpose, but people get convinced to over-borrow or do risky things they probably shouldn't all the time. Practically speaking, this will largely mean both the ability to borrow going forward for any reason will become more expensive and harder to secure, because underwriting standards are going to tighten. Risk of default is higher, investors in Mortgage Backed Securities (or any debt security) are going to change which kinds they buy into based off it. The lenders will not want to make loans they can't sell, and the market adjusts.