Graphic via Econompic Data.
The worldwide shock and awe campaign against seized up interbank lending is having the desired effect, at least as it relates to LIBOR, according to the Wall Street Journal.
"Money market tensions are easing," said Lena Komileva, head of G7 market economics at Tullett Prebon…three-month U.S. dollar Libor dropped to 3.83375%, the lowest since September 26, from Monday’s fixing of 4.05875%. The rate has shed nearly 100 basis points since peaking at 4.81875% on October 10.
As we mentioned last week, this is good news for those with a LIBOR indexed Adjustable Rate Mortgage, especially those facing an adjustment in the next 45 days or so.
LIBOR still has some ground to cover before it’s back to "normal." The comparable 1YR Constant Maturity Treasury Index is roughly 1.5% lower than the 1 YR LIBOR. Normal difference is .25%, give or take.
Still this qualifies as meaningful progress. Things are coming back down to earth, which means your impending adjustment just got smaller.
If you aren’t sure what index your ARM carries, much less how to calculate the adjustment, fear not. Follow us after the jump (as in, click on the link below, wherein we help you sort out just what you may be up against)
1. Pull out the documents entitled "Mortgage", "Note", and "Adjustable Rate Rider" from the dusty folder you probably have not cracked open since your loan closed. Read them. Right now.
2. If after doing that you are still lost, reach out to me and I’ll walk you through it. Assuming you can lay your hands on the documents above, it will take less than 5 minutes, or a couple of emails.