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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: ild who wrote (27216)2/25/2005 12:24:54 PM
From: russwinter  Read Replies (2) of 110194
 
On the reset issue I found this:
pimco.com

Simon: We think the ARM story is overblown. People are talking about the fact that 45% or 50% of the mortgages being created right now are adjustable, but the percentage of ARMs being created right now is very small relative to the overall mortgage market. In terms of total mortgages outstanding, only 21% are going to adjust in the next five years and only 3% will adjust in the next 12 months.

But, I wonder how current his information is, and secondly this addresses national numbers not Calf, and Calf satellites. Both late 2003 and and 04 were huge ARMs years in the Bubble states like Calf. In Orange County, 60% of all loans are ARMs. Not all of those are 7 and 5 year ARMs. The Fannie Mae 2003 annual review spoke of 3 year ARMs being the vehicle of choice in that year. So conservatively I have to believe at least 8% in Calf (at least twice the national average use ARMs) will be the number for resets, and I'll bet much higher. The Libor and CMT rates in early 04 (you'll have to pop up new search here and enter 1 CMT and 1 Libor back to Oct, 03. 1 Libor today is 3.51, and 1 CMT is 3.12, quite an increase (around 2%)from a year ago (1.34 and 1.19 respectively):
mortgage-x.com
must have tempted many into the one, six month and one year route.
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