cramer wie zu dot.com zeiten
Panic Over Option ARMS Is Just Noise
By Jim CramerRealMoney.com Columnist8/15/2006 9:10
Everyone who uses a Option ARM is an idiot and will lose his house when rates go higher. There. There's a constant theme in the drumbeat of the press that the housing market is the Achilles heel of the economy.
What a joke. OK, so 12% of borrowers have taken out these unique loans that allow you to call your own shots, up from 8% a year ago. You get to have a teaser low rate that is much below what you would have without it. (in den hotspot sind zum teil 70% der kredite arms und negarm)
The implication of the media is that people are buying these homes to flip them, and when the value doesn't go higher they will freak out and become casualties of the new higher rates and will have to default on their houses, leading to a continued glut of homes. (passiert gerade)
Sorry, that's just stupid. I am sure some of the borrowers are speculative, but you know what? Funny thing. The borrowers are not morons. They can read the papers, too. They recognize that homes aren't selling. (zu spät. in 2005 sind 40% an investoren gegangen. das jetzt keiner mehr spekuliert ist klar.das war aber auch nach dem nasdagbust der fall. toller typ.......)
I would bet that most of these borrowers are simply younger people with new jobs who are correctly taking advantage of a low rate. People who have taken this rate have been very right. The long end hasn't gone up. It seems like it won't go up now. So while they build up some savings with the low rate, they get stronger down the road and then can take the higher rate.
The media call it dangerous. I call it prudence. !
These loans work as long as employment stays steady. The fact that it has tells me not to worry, that this is just another phantom problem not worth fretting about.
But I am sure the media will fret. I bet we hear about this all day.
paßt hervoorragend zu den ganzen berichten über steigende insolvenzen.
bin ich froh das ich kein cnbc mehr gucke.
update: dank geht an getstucco und ben
Option ARMs Remain Popular In Spite of Risks
by Ruth Simon
Despite concerns from regulators, lenders continued to issue large numbers of so-called option ARMs during the first five months of the year, new data show.
Many borrowers have been attracted to these loans because of their low introductory rates, which have run as little as 1%. But borrowers who elect to make the minimum payment can be hit with a rising loan balance. They can also face “payment shock” down the road, when their monthly pament resets. Roughly 75% of borrowers with option ARMs are currently electing to make the minimum payment, according to UBS AG.(option arm=negarm=negative tilgung)
Option ARMs accounted for 12.3% of mortgage originations through May, up from 8.4% in all of 2005, according to a new study by LoanPerformance, a unit of First American Corp. The study looked at loans sold to investors that buy mortgage-backed securities. (The data exclude loans sold to Fannie Mae and Freddie Mac…).
The loans’ popularity comes as rising interest rates are making them less attractive.…“It’s hard to know why anybody would want [an option ARM] in the current rate environment,” says Keith Gumbinger, a mortgage analyst with HSH Associates. Yet borrowers seeking to lower their monthly payments have few other choices. Given the narrow difference between short- and long-term interest rates, Mr. Gumbinger says, “there are very few products that … provide payment relief.”
There already are signs that some borrowers who took out option ARMs are running into trouble. Foreclosure rates fro option ARMs “are rising fast,” although they are coming off very low levels, according to a report issued last month by Credit Suisse Group. Option ARMs are going into foreclosure an average of 10 months after the loan is made, earlier than for other types of loans, and that is “a cause of concern,” the report said. (diese zahl kann allerdings nicht mal ich glauben)