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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: russwinter who wrote (46021)	11/23/2005 10:28:55 AM
From: Ramsey Su	Read Replies (2) of 110194

so what is this week's numbers telling us? Purchase index is not going down as fast as expected. Are these real purchase applications or are they just prequals for the lookers? In either case, it is still showing substantial interest. The refi index is down. Who would refinance today? I would, if my hybrid is coming to reset (I took out a 7/1 in 2003). I figure at today's rate, my reset would be 2.25 + 1 yr libor, or about 7%. There would be no reason why I would dump this adjustable for a lower fixed. Applying same logic, it seems to me that almost all types of ARMs should be converting to fix today if it is feasible. There is so much down side risk to an adjustable and no upside. The only advantage to holding an ARM today would be if the rates drop. If that is the case, you can always refi. It is possible that refinance applications, at about 40% of total app volume, are already reflecting the conversion to FRM..

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