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I know interest rates are going up . Wondering if this means we might see more homeowners with adjustable rates defaulting . Or is the increase not significant enough to cause much of an impact .
Also about what percentage of homeowners have an adjustable rate these days ?
Rates are still low. They will refi if it is an issue.
I don't have exact numbers, but it is a very low percentage. I'd guess somewhere in the 3-5% range, but I work for a title company not a mortgage company.
Rates are still low. They will refi if it is an issue.
I don't have exact numbers, but it is a very low percentage. I'd guess somewhere in the 3-5% range, but I work for a title company not a mortgage company.
Oh ok . Yeah it seems like the adjustable rates were more popular back during the last housing bubble.
I'm getting ready to sell my home so the increase in rates is a concern..but I could see it also motivating people to buy quicker to lock in low rates due to fear of rates going even higher.
Market does seem strong in my area. Definitely seems to be more demand than supply of available homes.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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Yes, the ARM was a big reason for the crisis in the recession, but the worst was the ARM where there was interest only paid for a period such as 5 years, then the loan amortized to finish by the end of the agreed upon term. If you were planning to sell within 3-4 years, or at least re-finance, it was a great tool. Unfortunately as home prices dropped those people couldn't sell or refi for what they owed, and the payments went up. Going from $1,200-$2,000 for example, with people being laid off was not a good combination.
I'm getting ready to sell my home so the increase in rates is a concern..
This is where you need to check to see if your loan is an assumable loan or not. Most VA and many (if not all) FHA loans are assumable. I'm about to list one with a VA at 3.25%. I think other VA buyers would love that rate!
I know interest rates are going up . Wondering if this means we might see more homeowners with adjustable rates defaulting . Or is the increase not significant enough to cause much of an impact .
Also about what percentage of homeowners have an adjustable rate these days ?
fyi-30 year rates shot up after the election and have basically remained flat since that time. You don't "know" that rates are going up. After the last FED rate hike in Dec. of 2016, 30 year interest rates went down a nice bit after the rate hike. After yesterday's rate hike, interest rate pricing improved slightly. Long term mortgage interest rates are still down overall from 12/16 to now and that is after 2 FED rate hikes.
Bottom line is there is no guaranty that long term mortgage interest rates are going to go up in the near term. They could go up. They could go down. They could stay flat.
I wonder what percentage of mortgages on the books today are adjustable? With fixed rates being so low for so long, I would think most adjustables have been refinanced with a fixed rate loan. But there I go thinking again.
I had an adjustable in the mid 80s when fixed rates were 13 - 14%. The rate went down every year as the mortgage market stopped being crazy.
Yes, the ARM was a big reason for the crisis in the recession, but the worst was the ARM where there was interest only paid for a period such as 5 years, then the loan amortized to finish by the end of the agreed upon term. If you were planning to sell within 3-4 years, or at least re-finance, it was a great tool. Unfortunately as home prices dropped those people couldn't sell or refi for what they owed, and the payments went up. Going from $1,200-$2,000 for example, with people being laid off was not a good combination.
Actually, it was the NO-DOC pay option ARM or the pick-n-pay that hurt, not the ARM. When you have a housekeeper (that doesn't own the company) applying for a 100% mortgage on a 400K home, saying she makes 100K a year.....When it's closer to 25K......That is what took us down the rabbit hole.
There are many responsible borrowers out there that have done very well with an ARM, and in the past 10 years, they've come out well ahead of the fixed market. Many are already onto their move up purchase.
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