Back when interest rates had hit rock bottom, consumers would often turn to “piggyback loans” to avoid the extra expense of monthly private mortgage insurance payments. Now that interest rates are up, private mortgage insurance may be making a comeback.
“Because interest rates have gone up, making piggyback loans is less favorable,” said Brian Carey, an economist with Moody’s Economy.com. “Every time the Fed increases interest rates, the interest rates on those loans go up with the prime interest rate. They are becoming more expensive.