Mortgage Blog

I sent a few emails to my past clients to explain to me why we need to lock the rate and move on.

I know we got low ARM rates for a few years, and we already saved plenty of money on the low rates. But when ARM rates reset to over 4%, we will have to choose comparatively good rates. And wait for 3 years. I expect the interest rate will go down around 2020-2021.

If you watched ARM rates and 30 yr fixed rates, you will find the difference is narrower. And it is called "Inverted yield curve", and if the Fed increase rates in Dec and 3 times in 2018, it is possible that if the short term rate is very close to fixed 30 yr fixed rates, then it is very likely we will go to another recission. And then the rate will go down after that.

Sse the link here: https://www.bloomberg.com/news/articles/2017-10-11/inverted-yield-curve-in-2018-perhaps-if-fed-keeps-up-this-pace. "The yield curve from three months to 10 years last inverted in August 2007, four months before the U.S. entered an 18-month recession. An inversion of those maturities predicted the past seven economic downturns. A month ago, the spread fell to 97 basis points, the lowest since 2008, before rebounding to about 126 basis points".

So I will watch the yield curve closely, just for the interest rate purpose and my own investment of stocks and bonds.