When I wrote: FED FUND RATE and PRIME RATE HAVE NOTHING TO DO WITH MORTGAGE RATES OR ARM RATES
I was responding to:
Will this affect the October ARM resets on existing mortgages?
Which was a posting related to a 50 bps drop in FF rate.
(If FF rate drops another 50bps or more, wake me up)
And per my explanation above, it WILL NOT help most people with ARMS that have not had a 1st or 2nd adjustment, unless rates continue to fall. I don’t think it is likely that a current 5 YR ARM will not be adjusting upwards in year #6.
There is no ONE index that is used for ARMS. There could be one with a WHOPPER + a margin for all I know.
LIBOR, COFI, TBILL rate etc are common ones.
Price of Countrywide stock isn’t :-0
