[montag813]

Question: Why do ARMs continue to rise, while rates in general have come down quite a bit in the past 6 months?

Above: The yield on the 10-year Note

[ex 98C MI Dude]

Because the industry is finally pricing risk back into the market.

They are finally admitting that ‘ninja’ (aka: no income/no job/assets) loans are a really bad and risk-laden idea. And ARMs are for people who do not intend to stay in the house for a long period of time before selling; which isn’t a good idea in a market that is showing too high an inventory to move effectively.

So ARM rates will continue to move higher, and more of the serious buyers/owners will move to the very stable 30 year fixed. The market fixes itself. Until the Fed.gov interferes again, creating yet another imbalance.

[Centurion2000]

Question: Why do ARMs continue to rise, while rates in general have come down quite a bit in the past 6 months?

A lot of those ARMs have interest rates that were locked in 3/4 years ago when a 4.25 15 year fixed loans were available.

Now it's 3-4 years later and the ARM rates are reflecting the current interest rates instead of 2003-2004 time periods.

Anyone that had/bought a house that did not refinance / finance with fixed rates at the bottom of a 40 year low was an idiot.