The answer my friend, is blowing in the wind. Actually it’s all over this board. Top 3 as I see it…
Lenders aren’t getting as tight as they should. There were some fairly strict guidelines introduced a few months back, but they are still just guidelines.
There are still many people who buy based on the monthly mortgage payment at the introductory rate, without thinking about whether or not they will be able to afford the mortgage if they cannot re-finance when the rate resets.
While there is a lot of foreclosure activity right now, most of the existing ARMs are resetting later this year/next year. This will put a lot more inventory in the hands of the banks.