| (AFX UK Focus) 2008-03-28 05:01 GMT: Falling rates seen having mixed impact on US Alt-A, subprime borrowers - S&P
MUMBAI (Thomson Financial) - Falling rates spurred by recent actions by the US Federal Reserve Bank have had a mixed impact on the US Alt-A and subprime borrowers, according to a recent report by Standard & Poor's Ratings Services. The Federal Reserve Bank's lowering of its interest rate caused the European inter-bank lending rates (one- and six-month LIBOR rates) to fall to its lowest levels in more than three years (2.6 pct and 2.4 pct, as on March 18). Since most hybrid adjustable-rate mortgage (ARM) loans in the US are benchmarked to six-month LIBOR, this decrease could lower monthly payments for ARM loans, lower payment shocks for hybrid ARMs that are due to reset and don't refinance to a new loan with a fixed rate, increased excess spread for RMBS transactions backed by fixed-rate collateral and increased refinance opportunity for borrowers with ARM loans.
Falling rates seen having mixed impact on US Alt-A, subprime borrowers - S&P
MUMBAI (Thomson Financial) - Falling rates spurred by recent actions by the US Federal Reserve Bank have had a mixed impact on the US Alt-A and subprime borrowers, according to a recent report by Standard & Poor's Ratings Services. The Federal Reserve Bank's lowering of its interest rate caused the European inter-bank lending rates (one- and six-month LIBOR rates) to fall to its lowest levels in more than three years (2.6 pct and 2.4 pct, as on March 18). Since most hybrid adjustable-rate mortgage (ARM) loans in the US are benchmarked to six-month LIBOR, this decrease could lower monthly payments for ARM loans, lower payment shocks for hybrid ARMs that are due to reset and don't refinance to a new loan with a fixed rate, increased excess spread for RMBS transactions backed by fixed-rate collateral and increased refinance opportunity for borrowers with ARM loans.
Supreme ‘savings account’
Soaring debt and the increasing likelihood of more interest rate hikes are making an economic meltdown seem imminent. Avoid the pain � pump as much of your disposable income into your mortgage. As a new poll of visitors to www.justmoney.co.za reveals that nearly two out of five people can no longer afford to put money aside for savings or investments. This, according to www.justmoney.co.za, means that, for the average home owner, their property is their best and safest investment. Paul Beadle, managing director of www.justmoney.co.za explains: �With the stock markets so volatile at the moment, the average South African is better off paying any excess money at the end of the month into their mortgage. It is less risky than stock market-linked investments, actually provides a better return than standard savings accounts and will enable people to pay off their mortgages more quickly, saving them even more money.
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