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Monday, March 10, 2008
The ARM story you haven't read (yet)
I confess, I have an adjustable rate mortgage. I am one of the millions who risked that I could refinance before the fixed rate period ended, and "lost."
However, I also know how my ARM is derived, and as such, I've noticed that for those of us who stuck it out, the biggest concern isn't the market, but rather politicians claiming to "help" folks like me.
To get an idea what I mean, read on.
Posted by D.J. McGuire on March 10, 2008 | Permalink
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Comments
Great post, DJ. Here's my question: The Fed controls the "overnight" interest rate, but ultimately banks will set rates based on risk, inflation assumptions, return assumptions, etc. When the Canadian central bank lowered rates recently, retail banks said they would NOT respond by lowering their retail mortgage rates because default risks were higher. Since the market ultimately sets interest rates, how does that factor into your Constant Maturity Treasury Index scenario?
Sincerely,
Confused in Calgary
Posted by: Matthew Johnston | 10-Mar-08 11:23:43 AM
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