said it will sell a mortgage that customers can transfer at no cost from one home to another, fixed at current interest rates.
As a 30-year, fixed-rate mortgage loan available to any homebuyer who qualifies for a mortgage, the offering will not be available to homeowners seeking to refinance.
E*Trade Mortgage, with $17 billion in assets, deals primarily with borrowers with high-grade credit and serviced 40,000 customers last year, according to a
Wall Street Journal
report. It originated $6.2 billion in mortgages in 2002, less than 1% of the overall $2.5 trillion in U.S. home mortgages taken out last year.
"Industry experts predict that mortgage interest rates will rise significantly in the next several years," said Robert Bernabe, head of retail mortgage lending at E*Trade Financial, in a statement. "This is the first time this concept will be widely available in the United States, giving consumers the ability to extend the benefit of today's record-low interest rates."
Today, a portable loan would come with an interest rate of 5.875%, 3/8 of a point higher than a regular 30-year, fixed-rate loan. The higher rate compensates for the longer life of the loan. If the borrower decides to move to a new home, the remainder of the loan will be transferred over at the same rate. A second mortgage will then be available at the same interest rate of the first mortgage for a fee.
The approval process for a portable loan would be the same as that of a typical 30-year fixed loan, with a 20% down payment required.