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Adjustable-rate mortgages are scheduled to see their interest rates adjust

MC BumSlap

MC BumSlap

Big Belly Bum Scud
Joined
Jul 8, 2008
Location
Burnistoun
Moto(s)
Faux Bonneville
Name
J
Could we see a small tidal wave of foreclosures in 2027? :dunno

www.cnbc.com

Thousands of homeowners face adjustable-rate mortgage resets — and much higher payments

Adjustable-rate mortgages with low introductory interest rates are facing their first adjustment at a time when rates are much higher, according to new data.
www.cnbc.com www.cnbc.com

About 150,000 homeowners with adjustable-rate mortgages face their first interest rate adjustment this year, with 64,000 scheduled for a shift from August through December, according to ICE Mortgage Technology.

Some borrowers could see monthly payments jump by hundreds of dollars, and in some cases, more than $1,000. Others could see their payments drop as their rate adjusts downward.

There are about 3.1 million ARMs outstanding, representing just 5.6% of the roughly 55.4 million active mortgages in the U.S., according to ICE Mortgage Technoloy.




So glad I have a 2.5% 30-year fixed. :D
 
I used to use adjustable rate mortgages. And I would refinance when the rates went down. The last time I did it was a bit over 5 years ago. I now have a 30 year fixed loan at 2.5%.
 
MC BumSlap said:
Could we see a small tidal wave of foreclosures in 2027? :dunno

www.cnbc.com

Thousands of homeowners face adjustable-rate mortgage resets — and much higher payments

Adjustable-rate mortgages with low introductory interest rates are facing their first adjustment at a time when rates are much higher, according to new data.
www.cnbc.com www.cnbc.com

About 150,000 homeowners with adjustable-rate mortgages face their first interest rate adjustment this year, with 64,000 scheduled for a shift from August through December, according to ICE Mortgage Technology.

Some borrowers could see monthly payments jump by hundreds of dollars, and in some cases, more than $1,000. Others could see their payments drop as their rate adjusts downward.

There are about 3.1 million ARMs outstanding, representing just 5.6% of the roughly 55.4 million active mortgages in the U.S., according to ICE Mortgage Technoloy.




So glad I have a 2.5% 30-year fixed. :D
Click to expand...

Probably just high risk. Could be good for the market to get more inventory out there.
 
More inventory will bring prices down. But who really wants that? Buyers? Yes. Sellers? No.
 
Are we sure that those equity funds won't just snap them up as they default, leaving the market flat?
 
Sooo, just so I'm clear....

we're talking about people who are just getting by.... being priced out of their own homes....as good for the "market".

?
 
augustiron said:
Sooo, just so I'm clear....

we're talking about people who are just getting by.... being priced out of their own homes....as good for the "market".

?
Click to expand...

Shouldn't get an arm if you can't afford the adjustment up. I just bought a house in January and the arm rate which is locked for 7 years was 5.5% vs 6.5% conventional 30 year

I have enough investments to buy the house outright but I'm treating it like a balloon payment. In 6 years I'll see where the rates are and adjust accordingly
 
So you're saying people who are just getting by may not have made the best financial decisions in taking on debt,
and the lending system is OK and not predatory or at fault?

Yeah, we are all responsible for the decisions we make, I get it, but predatory lending is still a thing.
 
150,000 is a much smaller number than I would have expected.
 
GAJ said:
150,000 is a much smaller number than I would have expected.
Click to expand...
there are 3mm total arm mortgages, totaling around 6% of total mortgages outstanding. i expect this number to increase as mortgage interest rates remain elevated. people are betting that interest rates will come down and not keep going up. if they bet wrong, they may be forced to move when their rates spike
 
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as an aside, i am begrudgingly in that boat; hoping that rates go down before 2032...
 
*forced to move* is the best possible outcome by being able to sell their house and get out, hopefully not underwater digging their financial hole deeper.

or, of course there's always the option to be foreclosed on
 
It seems that people who get ARMs are hedging their bet beyond just having a lower payment...
  • Expect to sell before the first adjustment.
  • The initial rate discount is substantial.
  • Have sufficient savings to absorb a payment increase.
  • Expect to refinance before the adjustment
  • Expect income to increase to account for the increase in the mortgage payment
But then....
  • Payment increase with very little or no increase in income.
  • Rates stay high.
  • Can't refinance for more favorable terms.
  • Rate caps have limits and hope that cap is still makes it affordable.
  • Housing market softens because of high rates
 
Let's face it, ARM is a gamble, but the upside can be quite large if it pays off, the pain can be 7 years long if it doesn't pay off.

Nothing can really increase your wealth better than getting into the real estate market, so it's probably a worthwhile risk if the alternative is to pay rent for the next 20 years.
 
Yes, ARM’s certainly have risks but if you play them right, with a bit of luck you can come out ahead. Sometimes way ahead.
 
Still, that was better than a fixed rate of 18%.
 
I happen to like my adjustable-rate HELOC

Dont need to refinance when it goes down :LOL:

I actually save a lot of interest on my HELOC because I can pay it off with nearly zero risk.
 
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