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LIBOR vs Fed


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#1 endisnear

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Posted 31 December 2006 - 08:35 PM

Problem is ARM loans are based on LIBOR index which has been rising. Here is historical chart.

http://www.moneycafe...libor.htm#chart

Typically an ARM would get a 1, 2, 3, or 5 yr fixt rate based on credit, income, debt ratio, etc...then if loan is approved, they get a low initial fixed rate for a given time, then it resets to an ARM that adjusts quarterly in most cases..its usually about 2pts above LIBOR if you are in the highest credit ratings...more if lower.

So, you have 1.3 trillion ARMS resetting for the first time in 07, most going up 2-3pt initially at least even if rates stay right here. Thats about $4-500/month for a 218k median price house in USA.

And they can't refinance to a fixed rate w/o 20% equity, many of which have 0 or are under water.

Doesn't matter if rates stay same here or even lower for that matter. LIBOR is London bank...and those limeys are raising....

Housing hasn't even begun to have an effect on anything. Media isn't reporting the entire truth or even part o fit.. its misleading people.

#2 jawndissedi

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Posted 31 December 2006 - 09:36 PM

Problem is ARM loans are based on LIBOR index which has been rising. Here is historical chart.

http://www.moneycafe...libor.htm#chart

Typically an ARM would get a 1, 2, 3, or 5 yr fixt rate based on credit, income, debt ratio, etc...then if loan is approved, they get a low initial fixed rate for a given time, then it resets to an ARM that adjusts quarterly in most cases..its usually about 2pts above LIBOR if you are in the highest credit ratings...more if lower.

So, you have 1.3 trillion ARMS resetting for the first time in 07, most going up 2-3pt initially at least even if rates stay right here. Thats about $4-500/month for a 218k median price house in USA.

And they can't refinance to a fixed rate w/o 20% equity, many of which have 0 or are under water.

Doesn't matter if rates stay same here or even lower for that matter. LIBOR is London bank...and those limeys are raising....

Housing hasn't even begun to have an effect on anything. Media isn't reporting the entire truth or even part o fit.. its misleading people.


Some folks are beginning to get the picture:

Bloomberg on MBS downgrades
Da nile is more than a river in Egypt.