“This goes along with my comment yesterday about the repricing of risk. It’s not a bad thing.
This concern about jumbo mortgages costing 6.8% or 7.5% is actually funny because for most of the 1990s boom, and well into the 2000s, interest rates were exactly at these levels!
When I bought my condo in October 2000 guess what my interest rate was – about 6.75%! Of course I refinanced in 2003 when rates bottomed out. People have forgotten that for much of history rates were more between 5% and 8% then 4% – and that during the boom years of the 1990s rates were higher than they’ve been since 1/1/2000!
See the attached chart of the rate on a 30 year fixed. I ran the data from 12/31/1994 to yesterday, daily readings.
I don’t have access to 5 year ARMs data but 30 Year Fixed are always a little higher so that would mean that the exotics were a few basis points lower. But, the chart makes the point…”
We would have to agree. Thanks for the information.
–Mortgage Reportage [theFrontSteps]