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I am not sure where you get the rates for ARM loans that suddenly went up. Most ARM loans define the rate after fixed period as "An Index" + "Margin"(2%-3%). Th

• Tloewald 12y ago
  Where do I get these rates? Personal experience. I bought a house in 2006 and already had a house purchased in 2004. Also your figures seem wrong to me: http://www.hsh.com/natmo2007.html http://www.hsh.com/natmo2007.html -- in 2007 a 1 year ARM was over 6% for most of the year, longer ARM loans would have been higher. Most people in 2008 didn't have loans taken out in 2008, but more likely in 2004-2006 when the market was hot and rates were higher. Incidentally, while the real interest LIBOR rates right now are close to zero, actual mortgage rates are considerably higher, especially on 30y fixed (we got a 15y fixed mortgage because with the difference in interest rates our mortgage payment was only about 40% higher than the 30y option).
  • woobar 12y ago
    Ok, so in your personal experience, what was the "margin" portion of the adjustable rate mortgage that you had? My numbers look wrong to you because you are comparing them to your APR. You shouldn't. As I've mentioned before APR = Index + Margin. If index goes down, and margin is fixed, what happens to the APR? You are correct, most people did not get their mortgages in 2008. But the family we are discussing here did. And for anyone with 5/1 ARM taken out in 2004-2008 the rate would have gone down after the fixed period.