Cross-Posted with www.freerateupdate.com. The source for mortgage rate news.
Ten's of Millions of homeowners have adjusted from an ARM with a fixed rate period into a fully adjustable jumbo loan. Following the large drop in LIBOR rates since 2007, floating with the 6-month or 1 year LIBOR index has been an excellent risk home owners took the last few years. Of course now we hear solid information that job losses have stopped and we are in the midst of an economic recovery. The underlying rate trend in these indexes is a push higher on each piece of good news around the world regrading the stabilization of consumer retail sales, auto sales, and the home purchase market. Any real growth in the economy will be meet with higher interest rates and this will be reflected on the hundreds of billions of dollars worth of jumbo loan mortgages that are sitting with rates of about 3.50-4% now.
We think home owners that are floating against the LIBOR indexes without a plan to sell soon or get another ARM or better yet a fixed jumbo loan are living without interest rate insurance. I am a firm believer in having full coverage auto insurance given the cost of coverage vs the financial risk of an accident. They are just waiting for a financial accident when they get the new rate increase notice. Most ARMs adjust every six months with a 30-60 day notice of the new interest rate and payment. The jumbo loan rate trend has only been down for the last few years as the world almost fell off a cliff during the 07-08 meltdown. I think with the economic recovery gaining speed that it is only prudent to get some jumbo mortgage interest rate insurance and lock the lowest rates in history. Avoid an interest rate increase that for millions would come as a nasty surprise. If you need to refinance your jumbo mortgage within the next few years it’s prudent to explore your jumbo loan options now. As always, have a prosperous day.
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