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(former)FormerSanDiegan.
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April 1, 2008 at 2:14 PM #179801April 1, 2008 at 3:40 PM #179392
noone
ParticipantIn discussing the ARMs (as opposed to option ARMs), he gives one sentence to the problem of teaser rates “In cases where lenders were aggressive, initial rates may have been lower than implied above, creating more of a reset problem down the road.” I was under the impression that these teaser rates were the rule rather than the exception. I have nothing to base that on though.
So I guess the questions are, just how many of these ARMs had teaser rates below the normal ARM rate? How low were the teaser rates? How long are the teaser rates in effect? Are the borrowers able to afford the payments at the normal rate (even if it does go down 1-2%)?
April 1, 2008 at 3:40 PM #179759noone
ParticipantIn discussing the ARMs (as opposed to option ARMs), he gives one sentence to the problem of teaser rates “In cases where lenders were aggressive, initial rates may have been lower than implied above, creating more of a reset problem down the road.” I was under the impression that these teaser rates were the rule rather than the exception. I have nothing to base that on though.
So I guess the questions are, just how many of these ARMs had teaser rates below the normal ARM rate? How low were the teaser rates? How long are the teaser rates in effect? Are the borrowers able to afford the payments at the normal rate (even if it does go down 1-2%)?
April 1, 2008 at 3:40 PM #179763noone
ParticipantIn discussing the ARMs (as opposed to option ARMs), he gives one sentence to the problem of teaser rates “In cases where lenders were aggressive, initial rates may have been lower than implied above, creating more of a reset problem down the road.” I was under the impression that these teaser rates were the rule rather than the exception. I have nothing to base that on though.
So I guess the questions are, just how many of these ARMs had teaser rates below the normal ARM rate? How low were the teaser rates? How long are the teaser rates in effect? Are the borrowers able to afford the payments at the normal rate (even if it does go down 1-2%)?
April 1, 2008 at 3:40 PM #179775noone
ParticipantIn discussing the ARMs (as opposed to option ARMs), he gives one sentence to the problem of teaser rates “In cases where lenders were aggressive, initial rates may have been lower than implied above, creating more of a reset problem down the road.” I was under the impression that these teaser rates were the rule rather than the exception. I have nothing to base that on though.
So I guess the questions are, just how many of these ARMs had teaser rates below the normal ARM rate? How low were the teaser rates? How long are the teaser rates in effect? Are the borrowers able to afford the payments at the normal rate (even if it does go down 1-2%)?
April 1, 2008 at 3:40 PM #179851noone
ParticipantIn discussing the ARMs (as opposed to option ARMs), he gives one sentence to the problem of teaser rates “In cases where lenders were aggressive, initial rates may have been lower than implied above, creating more of a reset problem down the road.” I was under the impression that these teaser rates were the rule rather than the exception. I have nothing to base that on though.
So I guess the questions are, just how many of these ARMs had teaser rates below the normal ARM rate? How low were the teaser rates? How long are the teaser rates in effect? Are the borrowers able to afford the payments at the normal rate (even if it does go down 1-2%)?
April 1, 2008 at 6:20 PM #179467(former)FormerSanDiegan
ParticipantI can speak for the loans I considered/took circa 2003-2005. In one case (2003) I had a 5/1 ARM, I/O loan on a refinance for an investment property. The rate was 5.625 and would have reset in Oct ’08 at LIBOR + 2.25. Based on current LIBOR the reset rate would be 5%.
However, as a prudent person I refied into a 30-year fixed at 6.25% late last year when short-term rates were a couple points higher. In the short run I would have been better off keeping my loan.
Pretty much the same terms were available in 2005. These would be considered either alt-A or prime loans and did not have negative amortization options.
When you look at mortgage reset charts the ones with teaser rates are typically categorized as Option adjustable rate loans. If you look at the Credit-Suisse chart on Mish’s Blog you might notice that these are approximately the same order of magnitude as the sub-prime resets happening now.
I believe that the default rates on the option ARMS may rival the sub-prime defaults we are currently seeing.April 1, 2008 at 6:20 PM #179835(former)FormerSanDiegan
ParticipantI can speak for the loans I considered/took circa 2003-2005. In one case (2003) I had a 5/1 ARM, I/O loan on a refinance for an investment property. The rate was 5.625 and would have reset in Oct ’08 at LIBOR + 2.25. Based on current LIBOR the reset rate would be 5%.
However, as a prudent person I refied into a 30-year fixed at 6.25% late last year when short-term rates were a couple points higher. In the short run I would have been better off keeping my loan.
Pretty much the same terms were available in 2005. These would be considered either alt-A or prime loans and did not have negative amortization options.
When you look at mortgage reset charts the ones with teaser rates are typically categorized as Option adjustable rate loans. If you look at the Credit-Suisse chart on Mish’s Blog you might notice that these are approximately the same order of magnitude as the sub-prime resets happening now.
I believe that the default rates on the option ARMS may rival the sub-prime defaults we are currently seeing.April 1, 2008 at 6:20 PM #179838(former)FormerSanDiegan
ParticipantI can speak for the loans I considered/took circa 2003-2005. In one case (2003) I had a 5/1 ARM, I/O loan on a refinance for an investment property. The rate was 5.625 and would have reset in Oct ’08 at LIBOR + 2.25. Based on current LIBOR the reset rate would be 5%.
However, as a prudent person I refied into a 30-year fixed at 6.25% late last year when short-term rates were a couple points higher. In the short run I would have been better off keeping my loan.
Pretty much the same terms were available in 2005. These would be considered either alt-A or prime loans and did not have negative amortization options.
When you look at mortgage reset charts the ones with teaser rates are typically categorized as Option adjustable rate loans. If you look at the Credit-Suisse chart on Mish’s Blog you might notice that these are approximately the same order of magnitude as the sub-prime resets happening now.
I believe that the default rates on the option ARMS may rival the sub-prime defaults we are currently seeing.April 1, 2008 at 6:20 PM #179849(former)FormerSanDiegan
ParticipantI can speak for the loans I considered/took circa 2003-2005. In one case (2003) I had a 5/1 ARM, I/O loan on a refinance for an investment property. The rate was 5.625 and would have reset in Oct ’08 at LIBOR + 2.25. Based on current LIBOR the reset rate would be 5%.
However, as a prudent person I refied into a 30-year fixed at 6.25% late last year when short-term rates were a couple points higher. In the short run I would have been better off keeping my loan.
Pretty much the same terms were available in 2005. These would be considered either alt-A or prime loans and did not have negative amortization options.
When you look at mortgage reset charts the ones with teaser rates are typically categorized as Option adjustable rate loans. If you look at the Credit-Suisse chart on Mish’s Blog you might notice that these are approximately the same order of magnitude as the sub-prime resets happening now.
I believe that the default rates on the option ARMS may rival the sub-prime defaults we are currently seeing.April 1, 2008 at 6:20 PM #179926(former)FormerSanDiegan
ParticipantI can speak for the loans I considered/took circa 2003-2005. In one case (2003) I had a 5/1 ARM, I/O loan on a refinance for an investment property. The rate was 5.625 and would have reset in Oct ’08 at LIBOR + 2.25. Based on current LIBOR the reset rate would be 5%.
However, as a prudent person I refied into a 30-year fixed at 6.25% late last year when short-term rates were a couple points higher. In the short run I would have been better off keeping my loan.
Pretty much the same terms were available in 2005. These would be considered either alt-A or prime loans and did not have negative amortization options.
When you look at mortgage reset charts the ones with teaser rates are typically categorized as Option adjustable rate loans. If you look at the Credit-Suisse chart on Mish’s Blog you might notice that these are approximately the same order of magnitude as the sub-prime resets happening now.
I believe that the default rates on the option ARMS may rival the sub-prime defaults we are currently seeing. -
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