The cost of subprime loans
A Massachusetts Community and Banking Council report on mortgage lending practices found a higher percentage of so-called subprime loans, with elevated rates for higher-risk borrowers, in communities with more minority residents. Two current listings illustrate the difference the higher rate makes over the life of a loan. Figures show monthly principal and interest payments, after 5 percent down payment.
| 30-year mortgage costs | $349,900 | house in Brockton$289,000 | house inRandolph||||
| 5.5% conventional loan | $1,887 | $1,564 | ||||
| 8.5% subprime loan | $2,556 | $2,118 | ||||
| $679,439 | $562,928 | |||||
| Total payments at 8.5% | $920,113 | $762,332 |
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