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(former)FormerSanDiegan
Participant[quote=outtamojo]You should graph this so you can get in on that “love that chart” action : )[/quote]
OK. Here’s a chart
7%-
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6%-
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……….. (Doug Henning Pic)
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5%-
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4%-
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.^^^^^^^^^^^^^^^^————-___________
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3%-
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2%-
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….AUG….SEP….OCT….NOV….DEC….JAN….FEBParticipant[quote=briansd1]Many teaser rate loans adjust up automatically, regardless of interest rates.
[/quote]Most loans have a teaser (start) rate and a fully indexed rate. If the start rate is below the fully indexed rate when the index is near zero, then yes these would adjust upward, regardless of rates.
However, the vast majority 5-year Prime and alt-A ARMs originating 5 years ago (and resetting currently) had start rates in the mid 5% range and 1-year or 6-momth adjustable rates that are set by the index + 2 to 3%. (less than 4% reset rates currently).
Although I think 80% of option ARMs (as opposed to prime and alt-A) are toast in the long run , that category, too contains many cases of reset rates falling to the point where they are no longer neg-am (in the short run).
[quote=briansd1]
Also refinance is not possible with bad credit and/or no equity. [/quote]I agree. No refi if underwater or bad credit. However, until rates go up, these resets are not the trigger many expected to be pulled during 2009-2010. Alt-A and Prime adjustable loans are no less affordable to these owners than they were 5 years ago (well, at least the 70% of them that are still fully employed).
It’s all about wherewithal of the owners. ARMs that reset at or below original rates will allow many of these owners to maintain monthly payments.
The can gets kicked down the road.Participant[quote=briansd1]Many teaser rate loans adjust up automatically, regardless of interest rates.
[/quote]Most loans have a teaser (start) rate and a fully indexed rate. If the start rate is below the fully indexed rate when the index is near zero, then yes these would adjust upward, regardless of rates.
However, the vast majority 5-year Prime and alt-A ARMs originating 5 years ago (and resetting currently) had start rates in the mid 5% range and 1-year or 6-momth adjustable rates that are set by the index + 2 to 3%. (less than 4% reset rates currently).
Although I think 80% of option ARMs (as opposed to prime and alt-A) are toast in the long run , that category, too contains many cases of reset rates falling to the point where they are no longer neg-am (in the short run).
[quote=briansd1]
Also refinance is not possible with bad credit and/or no equity. [/quote]I agree. No refi if underwater or bad credit. However, until rates go up, these resets are not the trigger many expected to be pulled during 2009-2010. Alt-A and Prime adjustable loans are no less affordable to these owners than they were 5 years ago (well, at least the 70% of them that are still fully employed).
It’s all about wherewithal of the owners. ARMs that reset at or below original rates will allow many of these owners to maintain monthly payments.
The can gets kicked down the road.Participant[quote=briansd1]Many teaser rate loans adjust up automatically, regardless of interest rates.
[/quote]Most loans have a teaser (start) rate and a fully indexed rate. If the start rate is below the fully indexed rate when the index is near zero, then yes these would adjust upward, regardless of rates.
However, the vast majority 5-year Prime and alt-A ARMs originating 5 years ago (and resetting currently) had start rates in the mid 5% range and 1-year or 6-momth adjustable rates that are set by the index + 2 to 3%. (less than 4% reset rates currently).
Although I think 80% of option ARMs (as opposed to prime and alt-A) are toast in the long run , that category, too contains many cases of reset rates falling to the point where they are no longer neg-am (in the short run).
[quote=briansd1]
Also refinance is not possible with bad credit and/or no equity. [/quote]I agree. No refi if underwater or bad credit. However, until rates go up, these resets are not the trigger many expected to be pulled during 2009-2010. Alt-A and Prime adjustable loans are no less affordable to these owners than they were 5 years ago (well, at least the 70% of them that are still fully employed).
It’s all about wherewithal of the owners. ARMs that reset at or below original rates will allow many of these owners to maintain monthly payments.
The can gets kicked down the road.Participant[quote=briansd1]Many teaser rate loans adjust up automatically, regardless of interest rates.
[/quote]Most loans have a teaser (start) rate and a fully indexed rate. If the start rate is below the fully indexed rate when the index is near zero, then yes these would adjust upward, regardless of rates.
However, the vast majority 5-year Prime and alt-A ARMs originating 5 years ago (and resetting currently) had start rates in the mid 5% range and 1-year or 6-momth adjustable rates that are set by the index + 2 to 3%. (less than 4% reset rates currently).
Although I think 80% of option ARMs (as opposed to prime and alt-A) are toast in the long run , that category, too contains many cases of reset rates falling to the point where they are no longer neg-am (in the short run).
[quote=briansd1]
Also refinance is not possible with bad credit and/or no equity. [/quote]I agree. No refi if underwater or bad credit. However, until rates go up, these resets are not the trigger many expected to be pulled during 2009-2010. Alt-A and Prime adjustable loans are no less affordable to these owners than they were 5 years ago (well, at least the 70% of them that are still fully employed).
It’s all about wherewithal of the owners. ARMs that reset at or below original rates will allow many of these owners to maintain monthly payments.
The can gets kicked down the road.Participant[quote=briansd1]Many teaser rate loans adjust up automatically, regardless of interest rates.
[/quote]Most loans have a teaser (start) rate and a fully indexed rate. If the start rate is below the fully indexed rate when the index is near zero, then yes these would adjust upward, regardless of rates.
However, the vast majority 5-year Prime and alt-A ARMs originating 5 years ago (and resetting currently) had start rates in the mid 5% range and 1-year or 6-momth adjustable rates that are set by the index + 2 to 3%. (less than 4% reset rates currently).
Although I think 80% of option ARMs (as opposed to prime and alt-A) are toast in the long run , that category, too contains many cases of reset rates falling to the point where they are no longer neg-am (in the short run).
[quote=briansd1]
Also refinance is not possible with bad credit and/or no equity. [/quote]I agree. No refi if underwater or bad credit. However, until rates go up, these resets are not the trigger many expected to be pulled during 2009-2010. Alt-A and Prime adjustable loans are no less affordable to these owners than they were 5 years ago (well, at least the 70% of them that are still fully employed).
It’s all about wherewithal of the owners. ARMs that reset at or below original rates will allow many of these owners to maintain monthly payments.
The can gets kicked down the road.ParticipantI stopped updating this because it was so boring (which was kinda the point in the first place), but here’s the updates since September 2009 …
For those who have alt-A or Prime ARM loans tied to the 12-month LIBOR + 2.25% margin (rounded up to the next 8th).
Sept-Dec 2009
September 12-month LIBOR : 1.26%
fully-indexed ARM reset RATE : 3.625%October 12-month LIBOR: 1.33
fully-indexed ARM reset RATE : 3.625%November 12-month LIBOR: 1.20
fully-indexed ARM reset RATE : 3.5%December 12-month LIBOR: 1.02
fully-indexed ARM reset RATE : 3.375%2010
January 12-month LIBOR: 0.98
fully-indexed ARM reset RATE : 3.25%February 12-month LIBOR: 0.85
fully-indexed ARM reset RATE : 3.125%Most of these loans had starting rates in the mid 5% range, so they will either go down significantly ort stay the same in cases where there is an interest rate floor.
ParticipantI stopped updating this because it was so boring (which was kinda the point in the first place), but here’s the updates since September 2009 …
For those who have alt-A or Prime ARM loans tied to the 12-month LIBOR + 2.25% margin (rounded up to the next 8th).
Sept-Dec 2009
September 12-month LIBOR : 1.26%
fully-indexed ARM reset RATE : 3.625%October 12-month LIBOR: 1.33
fully-indexed ARM reset RATE : 3.625%November 12-month LIBOR: 1.20
fully-indexed ARM reset RATE : 3.5%December 12-month LIBOR: 1.02
fully-indexed ARM reset RATE : 3.375%2010
January 12-month LIBOR: 0.98
fully-indexed ARM reset RATE : 3.25%February 12-month LIBOR: 0.85
fully-indexed ARM reset RATE : 3.125%Most of these loans had starting rates in the mid 5% range, so they will either go down significantly ort stay the same in cases where there is an interest rate floor.
ParticipantI stopped updating this because it was so boring (which was kinda the point in the first place), but here’s the updates since September 2009 …
For those who have alt-A or Prime ARM loans tied to the 12-month LIBOR + 2.25% margin (rounded up to the next 8th).
Sept-Dec 2009
September 12-month LIBOR : 1.26%
fully-indexed ARM reset RATE : 3.625%October 12-month LIBOR: 1.33
fully-indexed ARM reset RATE : 3.625%November 12-month LIBOR: 1.20
fully-indexed ARM reset RATE : 3.5%December 12-month LIBOR: 1.02
fully-indexed ARM reset RATE : 3.375%2010
January 12-month LIBOR: 0.98
fully-indexed ARM reset RATE : 3.25%February 12-month LIBOR: 0.85
fully-indexed ARM reset RATE : 3.125%Most of these loans had starting rates in the mid 5% range, so they will either go down significantly ort stay the same in cases where there is an interest rate floor.
ParticipantI stopped updating this because it was so boring (which was kinda the point in the first place), but here’s the updates since September 2009 …
For those who have alt-A or Prime ARM loans tied to the 12-month LIBOR + 2.25% margin (rounded up to the next 8th).
Sept-Dec 2009
September 12-month LIBOR : 1.26%
fully-indexed ARM reset RATE : 3.625%October 12-month LIBOR: 1.33
fully-indexed ARM reset RATE : 3.625%November 12-month LIBOR: 1.20
fully-indexed ARM reset RATE : 3.5%December 12-month LIBOR: 1.02
fully-indexed ARM reset RATE : 3.375%2010
January 12-month LIBOR: 0.98
fully-indexed ARM reset RATE : 3.25%February 12-month LIBOR: 0.85
fully-indexed ARM reset RATE : 3.125%Most of these loans had starting rates in the mid 5% range, so they will either go down significantly ort stay the same in cases where there is an interest rate floor.
ParticipantI stopped updating this because it was so boring (which was kinda the point in the first place), but here’s the updates since September 2009 …
For those who have alt-A or Prime ARM loans tied to the 12-month LIBOR + 2.25% margin (rounded up to the next 8th).
Sept-Dec 2009
September 12-month LIBOR : 1.26%
fully-indexed ARM reset RATE : 3.625%October 12-month LIBOR: 1.33
fully-indexed ARM reset RATE : 3.625%November 12-month LIBOR: 1.20
fully-indexed ARM reset RATE : 3.5%December 12-month LIBOR: 1.02
fully-indexed ARM reset RATE : 3.375%2010
January 12-month LIBOR: 0.98
fully-indexed ARM reset RATE : 3.25%February 12-month LIBOR: 0.85
fully-indexed ARM reset RATE : 3.125%Most of these loans had starting rates in the mid 5% range, so they will either go down significantly ort stay the same in cases where there is an interest rate floor.
ParticipantOne risk is that the whole thing gets flattened in an earthquake in the interim.
Another risk is that the financing you use later will be recourse.
Yet another risk is that someone else jumps out of an airplane to overcome their fears, accidentally lands on your house, srtikes the gas line and the whole place goes up in flames.
Then there’s that whole Apophis asteroid Earth impact risk.
ParticipantOne risk is that the whole thing gets flattened in an earthquake in the interim.
Another risk is that the financing you use later will be recourse.
Yet another risk is that someone else jumps out of an airplane to overcome their fears, accidentally lands on your house, srtikes the gas line and the whole place goes up in flames.
Then there’s that whole Apophis asteroid Earth impact risk.
ParticipantOne risk is that the whole thing gets flattened in an earthquake in the interim.
Another risk is that the financing you use later will be recourse.
Yet another risk is that someone else jumps out of an airplane to overcome their fears, accidentally lands on your house, srtikes the gas line and the whole place goes up in flames.
Then there’s that whole Apophis asteroid Earth impact risk.
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