From Citigroup via Bloomberg:
About 121,000 mortgages will reset for the first time next month, according to the Citigroup report, which looked at only securitized mortgages. About 1.8 million loans have already begun adjusting based on benchmark rates, the report said, while 3.7 million face resets scheduled for after next month.
“Almost all” subprime and Alt-A ARMs with a few years of fixed rates, about 60 percent of those prime-jumbo mortgages and about 75 percent of such loans in Fannie Mae, Freddie Mac and Ginnie Mae bonds are linked to Libor, the report said. The loans most often are pegged to six-month Libor.
Over the past three weeks six-month Libor has climed from three percent to over four. And if you’ve held for over three years (or under one), it’s likely higher than before.
∙ Libor Rise to Boost Subprime ARM Defaults 10%, Citigroup Says [Bloomberg]
∙ JustQuotes: ARM Holders Take Note, Libor Lifts Off [SocketSite]