What a difference a few months make. Yesterday’s 6 month USD LIBOR was reported as 3.79. I think this index is very likely to continue to fall as the Fed continues to ease in ’08. I suggest that the so-called “Alt-A” ARMS with margins in the 2-2.5 range will reset in somewhat close proximity to their initial rates, and may later reset again at rates below the initial rate (aka payment decreases instead of increases) These loans do not appear to be in any imminent danger of blowing up, at least not due to massive payment hikes.
