Merrill Lynch Announces the Blended-Rate Mortgage

Business Wire, May 25, 2004

Business Editors

NEW YORK--(BUSINESS WIRE)--May 25, 2004

Revolutionary Home-Financing Product Combines Benefits of Fixed

and Adjustable Rates to Help Clients Diversify Interest Rate Risk

Merrill Lynch (NYSE: MER) today announced the Blended-Rate(SM) mortgage, a new adjustable-rate product that combines the lower rates of an adjustable-rate mortgage (ARM) with the lower risk of fixed-rate home financing.

"Until now, homeowners have had two basic choices - paying for the security of a traditional, fixed-rate mortgage or taking on more risk to benefit from lower rates and lower monthly payments with an ARM," said Larry Washington, chairman and CEO of Merrill Lynch Credit Corporation. "The flexibility of the Blended-Rate mortgage can offer clients both lower rates and lower risk. In light of interest rate concerns, this should be a very attractive option."

The Blended-Rate mortgage helps diversify interest-rate risk by combining a fixed rate and an adjustable rate during an initial period of 3, 5 or 7 years. The blended rate increases (or decreases) half as much as a traditional ARM, which provides greater protection from rising interest rates. The mortgage includes interest-only payments during the blended period and rates are adjusted semi-annually based on the 6-month London Interbank Offered Rate (LIBOR). After the blended period, the loan is amortized and the interest rate continues to adjust semi-annually based on the 6-month LIBOR plus a margin of 2%.

"The Blended-Rate mortgage is yet another way 'Total Merrill' helps clients look at their financial needs on both sides of the balance sheet," Mr. Washington said. "Understanding a client's total financial picture, including their liabilities, is imperative, and this innovative product helps clients manage financing needs and cash flow effectively in a fluctuating rate environment."

The Blended-Rate Mortgage includes the following features:

-- 25 year, LIBOR-based ARM with semi-annual rate adjustments

-- Interest-only, blended-rate period (selected by client) of 3,

5 or 7 years

-- Rate increases/decreases half as much as ARM during

blended-rate period

-- Rate after blended period based on 6-month LIBOR 2%

-- No prepayment penalties

-- Large loan amounts available, including jumbo loans

"Adjustable rates with significant volatility have been the only option available to homeowners seeking alternatives to traditional, fixed-rate mortgages," Mr. Washington said. "Now homeowners can cut their risk in half during the initial, blended period and diversify interest rate exposure."

Clients may gain greater cash flow flexibility and control with interest-only payments during the initial, blended-rate period. Interest-only payments can help lower monthly payments, and clients always have the option of paying toward the principal in any amount, at any time, without penalty during the entire term of the loan.

When considering a Blended-Rate mortgage, homeowners should evaluate the length of time they plan to own their home and their overall financial goals. Clients may want to select the blended-rate period that matches or exceeds the length of time they plan to own the home.

In the coming months, a leading-edge Mortgage Comparison Calculator will be available to the public on the Merrill Lynch Credit Corporation Web site (www.mlcc.com), where clients may input their home financing goals. They will witness the impact of a fluctuating rate environment, which may help their decisions on appropriate mortgage solutions. The tool is currently available to Merrill Lynch clients through their Financial Advisors.

Established in 1981, the Merrill Lynch Credit Corporation helped pioneer three innovative home financing strategies that have since been widely-adopted throughout the industry.

-- A home equity revolving line of credit with the launch of the

Equity Access(R) account in 1982, a product that allows

clients to save unnecessary interest expenses by borrowing

only what they need.

-- Interest-only mortgage payments with the launch of an

adjustable-rate mortgage, PrimeFirst(R) in 1990.

-- 100% financing (pledged-asset mortgages) with the launch of

Parent Power(R) in 1992 and Mortgage 100(SM) in 1993, products

that allow clients to pledge eligible assets in lieu of a cash

down payment.

Merrill Lynch is one of the world's leading financial management and advisory companies, with offices in 35 countries and total client assets of approximately $1.5 trillion. As an investment bank, it is a leading global underwriter of debt and equity securities and strategic advisor to corporations, governments, institutions and individuals worldwide. Through Merrill Lynch Investment Managers, the company is one of the world's largest managers of financial assets, with assets under management of $513 billion. For more information on Merrill Lynch, please visit www.ml.com.