Comments on: Why your adjustable interest rate mortgage isn’t helped by rate cuts

By: Tony

Tony — Sat, 01 Dec 2007 19:10:37 +0000

I suggest that any home debtor that takes a bail out from the tax payers and savers that follow the rules go here and confess your sins. http://www.subtleconfessions.com
You will have a lot to get off your chest after sucking the blood of the responsible people of this country.
How can you sleep at night!

By: Morgan

Morgan — Sat, 01 Dec 2007 03:10:38 +0000

Rob – I use the word trust when explaining risk in simple talk, but you’re right it’s risk and not trust. Thanks for calling me on that.

Aaron – You are right, I should have put that in there that the margins are usually so astronomically high that the resets are going to kill you regardless of what the LIBOR is at (unless it’s at 1) so the cuts don’t really matter. Great point.

By: Ann

Ann — Sat, 01 Dec 2007 01:39:21 +0000

This freeze is going to do what to the brokers that are surviving now on refi’s?? Especially if it is for 7 years. Seems to me that the Feds are giving the heads up on how long they think it will take for the housing market to rebound…

By: Aaron

Aaron — Fri, 30 Nov 2007 22:49:37 +0000

Rob – I believe your missing the point. Also the confidence in money vs commodities is waning(seen the price of gold lately). I know also off the point. Morgan what you failed to mention is the margin on those loan programs you were talking about 2/28, 3/27 ARMS, w/2-3yrs pre-pays. Most of the margins were between 5.5 and 7.5 so with that wonderful LIBOR around 5 and the margins in the 6s were looking at such discrepancies in rates between these customers paying almost 11 % and the prime borrowers paying just under 6. Makes me desire the golden olden FREE commercial money days.. I don’t see how the bailout of resetting arms is even going to work since most of the customers cant even income qualify at todays best rates since they played the house ATM game. Utter kaos…

By: Rob Dawg

Rob Dawg — Fri, 30 Nov 2007 20:27:09 +0000

In simple terms this means that banks don?t trust each other enough to lender one another money because no one wants to get stuck holding the bag.

Not true. The “velocity” of money has slowed not the confidence in money. There is a difference. Overnight, window and interbank lending isn’t under pressure. My Prime minus 1% HELOC has gone down a lot and is expected to go down even more.

It is correct and normal that risk and risk premiums and caution premiums be reflected in current lending terms. No trust, nothing except risk assignment.