Mortgage Blog

There are nothing new this week except that the stocks were down on the bad news and up so th egood news, and so did the mortgage rates.

One question some of my clients asked during the week, why the ARM rate did not go down?

If the rate goes "Flight to Quality", the ARM rate should go down when the stock market was down a lot if the LIBOR index kept the same. I am one of the agents watched the LIBOR index everyday, and noticed that this index was up from 0.84 in March and back to over 1.0 again starting this past week.

This is another sign that ARM Rate hits the bottom.

How about the 30 yr fixed rate? Right now, the only thing we can say that it will go with the news. Right now, it should be at the short term bottom. But lower rates are welcome if that's the trend for the next a few weeks. But I still recommend to lock
at the lows since we never know the bottom until it passed.

I know a very good investor. He invested a lots of properties in San Francisco and Pacifica during 2000 to 2006. And he did use ALT-A, Option ARM  loans(no income no assets) to maximize the leverage and took ARM loans right before the lenders tighten the underwriting guideline(he was so lucky). And for the past week, he refinanced all his ARM rates again. According to him, those 4.x rates for 5/1ARM or 7/1ARM is very good for those rental
properties.

And guess what? He is not the only one took the action. I got around 10 rental refi just the past week. What a coincidence!

So if you have ARM on your rental, you may need to talk to the agents about the best options. We will soon know that these good rates will not be availble for a few years.