If those loans are tied to the prime rate, yes. Unfortunately, about half of adjustable-rate mortgages (and most subprime / alt-a loans to those that are most at risk) are tied to LIBOR. Like the MBS shown in the chart, LIBOR has been relatively unaffected by the fed funds rate and in fact is more than a full percentage point higher than it was about six months ago. Could be ugly resets for those...
Matters to those HELOCs and ARMs.
ReplyDeleteIf those loans are tied to the prime rate, yes. Unfortunately, about half of adjustable-rate mortgages (and most subprime / alt-a loans to those that are most at risk) are tied to LIBOR. Like the MBS shown in the chart, LIBOR has been relatively unaffected by the fed funds rate and in fact is more than a full percentage point higher than it was about six months ago. Could be ugly resets for those...
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