Thursday, August 04, 2005

Jumbo 5/1 ARM vs. 30 Year Fixed

Here is a graph from showing the interest rates on a 5/1 ARM Jumbo Loan vs. a 30 year fixed loan (for loans originating in California):

Notice how the difference in interest rates is narrowing. Hopefully, the allure of these Adjustable Rate mortgage Loans will wane.


  1. Higher rate is not necessary to burst the bubble. However, I do welcome more rate hikes.

    I thought 5/1 ARM is passe. Everybody is using Option ARM now.

  2. I agree 100% that 'Higher rate is not necessary to burst the bubble.'

    Higher rates make a housing bubble pop more likely sooner.

  3. I know this is a it off topic but none of the blogs have mention the reintroduction of the 30 year T-bill. While this wasn't a secret it does spell that the goverment want to finance its hugh war debt with the longer term. I truly beliveve that they ressurected this bond to drag the 10 year out of it's "conundrum" position. I also believe that this is a calculated effort to deflate the bubble and maybe encourage savings. I have read other blogs that state that savings by US citizens would only add to a "world Glut " of savings. I disagree.. China, Japan etc have excess $$$ because of our excess consumption for there cheap products...I think we our priming our economy for a correction that few can 1980's type of recession.. 30 % percent of the population simply can't remember this type of economic downturn...