Low Rates Put Some In A Tough Position

This is an interesting article.  Many homeowners are taking advantage of near-record-low mortgage rates to refinance their loans. But for one group of borrowers the low market rates can create a dilemma.

These borrowers have a type of adjustable-rate mortgage known as a “hybrid” ARM, which carries a fixed interest rate for a certain number of years and then resets annually to rates tied to market benchmarks. Many of the loans are now resetting to new levels that are lower than the initial fixed rates. That’s because the yields on some common benchmarks used for resetting ARMs, such as the one-year Treasury bond, have fallen to their lowest levels in decades.”