Effect of record low interest rates on Alt-A resets?

[carmelrenter]

I’ve been holding out based on the idea that the upcoming Alt-A resets would cause a collapse of medium-high-end home prices, but I was wondering what the effect will be of the current record low interest rates. Admittedly if people have been negatively amortizing they may owe more than they did, but with such low fixed and variable rates I don’t see how resets would cause the pricing collapse people have been forecasting. They should be able to refinance (even with a variable rate) and hang onto their homes. At a minimum, it would spread out the effects of Alt-A resets long enough that it may not have a serious impact on the market.

What do people think?

[peterb]

For those that still have equity, it’s a break. But if one is upside down already or near it, a lower payment may not be a deciding factor.

[peterb]

For those that still have equity, it’s a break. But if one is upside down already or near it, a lower payment may not be a deciding factor.

[peterb]

For those that still have equity, it’s a break. But if one is upside down already or near it, a lower payment may not be a deciding factor.

[peterb]

For those that still have equity, it’s a break. But if one is upside down already or near it, a lower payment may not be a deciding factor.

[peterb]

For those that still have equity, it’s a break. But if one is upside down already or near it, a lower payment may not be a deciding factor.

[patb]

well if your reset is tied to fed funds it is great,
if it’s libor no help

[patb]

well if your reset is tied to fed funds it is great,
if it’s libor no help

[patb]

well if your reset is tied to fed funds it is great,
if it’s libor no help

[patb]

well if your reset is tied to fed funds it is great,
if it’s libor no help

[patb]

well if your reset is tied to fed funds it is great,
if it’s libor no help

[no_such_reality]

Libor is low too, mid-2s. So with margin, overall looking around 5.25% or so.

The Alt-A killer on reset isn’t the reset, it’s the recast for the Option-ARMs when they lose their minimum payment option because they trip the cap.

Something like 2/3rds of the mortgage in SoCal in the last years of the bubble where option ARMS.

[no_such_reality]

Libor is low too, mid-2s. So with margin, overall looking around 5.25% or so.

The Alt-A killer on reset isn’t the reset, it’s the recast for the Option-ARMs when they lose their minimum payment option because they trip the cap.

Something like 2/3rds of the mortgage in SoCal in the last years of the bubble where option ARMS.

[no_such_reality]

Libor is low too, mid-2s. So with margin, overall looking around 5.25% or so.

The Alt-A killer on reset isn’t the reset, it’s the recast for the Option-ARMs when they lose their minimum payment option because they trip the cap.

Something like 2/3rds of the mortgage in SoCal in the last years of the bubble where option ARMS.

[no_such_reality]

Libor is low too, mid-2s. So with margin, overall looking around 5.25% or so.

The Alt-A killer on reset isn’t the reset, it’s the recast for the Option-ARMs when they lose their minimum payment option because they trip the cap.

Something like 2/3rds of the mortgage in SoCal in the last years of the bubble where option ARMS.

[Author]

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