How Many ARMS Are There?

In an earlier post, I explained the dangers that Ben Bernanke was facing in keeping interest rates low and allowing the banks to use almost anything as collateral, especially in an election year. Among the concerns are recession, inflation, liquidity, etc. Another problem are the adjustable rate mortgages still on the market. While the majority of these ARMs are prime, they will reset at a much higher rate, especially given the LIBOR mis-stating fiasco. The combination of higher rates and decreased home value will make refinancing an impossibility for most. How bad is the situation? Yes, we're looking at Q2 2011, a full three years to unwind all of these positions. This is going to be slow and painful.