[KarlInOhio]

ARM’s still can’t adjust beyond their parameters - i.e., the margin and index. The only way this affects ARM rates is if the indexes like MTA, LIBOR, and COFI go up, and, if anything, they’ll probably go down once all this hubbub calms down.

How many of the ARMs' initial rates were far below their index rates, so that even if the market rates stay the same the mortgages' rates are guaranteed to go up? My first car loan was a variable one like that. The initial interest was 9% (decent for a kid still in college), then it jumped to 14% three months later because it was set to be some percentage above an index which had absolutely nothing to do with the initial 9%.

I have avoided variable rate loans since then.

[RockinRight]

Most hybrid (3/1, 5/1, etc) ARMS are like that.

All I meant was what happened the last few days won’t make a 3/1 ARM that wasn’t supposed to adjust till June 2008 suddenly adjust now, nor will it take a margin of 2.25 over LIBOR and suddenly make the margin 3.5. Even ARM mortgages have contractual obligations.