Last year alone, 40% of adjustable rate mortgages and interest-only loans were categorized as subprime.
The Mortgage Bankers Association reports the number of subprime adjustable rate mortgages at 2.9 million.
During the subprime lending boom adjustable rate mortgages got a bad name, and rightly so.
Five-year and one-year adjustable rate mortgages required an average payment of 0.6 percentage point.
For a long time, financial experts have recommended fixed rate mortgages over adjustable rate mortgages.
This leaves more risk embedded in adjustable rate mortgages there is more room for interest rates to move up than down.
Adjustable rate mortgages (ARM) need to produce a payment close to or even below rent to be a good buy.
Nearly 2 million households will risk default when the "teaser" rates on their adjustable rate mortgages expire within the next year.
As lender fees got higher and the number of adjustable rate mortgages rose, the hoped-for consumer savings were either reduced or failed to materialize.
As yields on debt increases, borrowing costs will rise for average Americans who have adjustable rate mortgages or in the process of getting an auto loan.
Could they not analyze cash flows of loans comprised of adjustable rate mortgages with interest rates that would increase by several percentage points after year one.
FORBES: Standard and Poor's Lack Of Integrity Will Be Exposed
And they all are ARMs. They all are adjustable rate mortgages that are resetting and - resetting two or three percentage points above what they originally were sold at.
Mr. GREG MC BRIDE (Financial Analyst, Bankright.com): The biggest beneficiaries of the Federal Reserves repeated interest rate cuts will be home owners that have adjustable rate mortgages due to reset in 2008.
The Bush administration, this week, has been trying to work out with mortgage lenders, including Countrywide and Citibank and others, to get some relief for people with adjustable rate mortgages.
Meanwhile, a series of hikes by the Federal Reserve raised interest rates from 1 percent to 5.25 percent, pushing many adjustable rate mortgages beyond the means of borrowers, Dodd said.
There were also reports this week that the Bush administration is trying to convince mortgage lenders to provide some relief to borrowers who face rising interest rates under adjustable rate mortgages.
The credit boom was created by initially low adjustable rate mortgages, interest-only or negative amortization loans, and an appreciating real estate market that allowed homeowners to extract equity to help make mortgage payments.
Adjustable rate mortgages exploded onto the scene offering us the opportunity to prosper from correctly guessing the future movement of interest rates but requiring us to comprehend the financial gyrations of these loans.
Under the first phase of Ohio's program, borrowers will meet certain income guidelines will be able to ditch their adjustable rate mortgages or other high interest rate loans and get into a 6.75 percent fixed rate mortgage.
This is the simplest of examples, but bear in mind that more exotic mortgage contracts like option adjustable rate mortgages (ARMs) and such can leave the household in a similar situation, facing not only impaired equity but also higher payments.
"The good news is that these refinancings could help some homeowners avoid expensive resets on adjustable rate mortgages, and in turn prevent some foreclosures, " said Spencer Rascoff, chief operating officer at Zillow.com, a real estate Web site based in Seattle.
Adjustable Rate Mortgages may be impacted.
FORBES: About The Alleged LIBOR "Scandal", Back Away From The Cliff
Homeowners have filed a suit against Bank Of America, Citigroup, Barclays, UBS, JPMorgan Chase, Deutsche Bank and others saying the manipulated rates sparked increases on their adjustable rate mortgages and resulted in unlawful profits for the banks.
FORBES: Libor Problems Go Global, Singapore Authorties Probe Citi Over Rigging
During the mortgage crisis, the vast majority of jumbos were adjustable-rate mortgages and hybrid adjustable-rate mortgages, which started at low fixed rates and switched to adjustable interest rates at the end of a set time period typically of five, seven or 10 years, said Keith Gumbinger, vice president at HSH.com, a mortgage-information website.
The average rate for one-year adjustable-rate mortgages declined to 6.86%, from 6.93%.
But a huge of recent loans are adjustable-rate mortgages because of those teaser rates.
Thornburg (nyse: TMA - news - people ) deals in large, adjustable-rate mortgages.
Interest rates on adjustable-rate mortgages, for instance, use the Libor rate as a reference.
Five-year and one-year adjustable-rate mortgages required an average 0.7 percentage point and 0.6 percentage point payment, respectively.
FirstFed's main product: option adjustable-rate mortgages, those that jump in rates to unaffordable heights following low fixed ones.
应用推荐