I’ve been wondering about this for a while.
In the past, a 30-year fixed mortgage, whether conventional or FHA, had a much higher rate compared to a 3/1 or 5/1 ARM.
Now, it’s the other way around. ARMs have higher rates.
Why is this happening? Is it because of the inverted yield curve, or is there another reason?
The problem is the inverted yield curve and low demand for Adjustable Rate Mortgages (ARMs) in the secondary market. Because there aren’t many ARMs available, there’s not a big market to buy or sell them. There’s not much supply or demand for these mortgages right now. When the yield curve goes back to normal, the situation for ARMs should get better.
The inverted yield curve is the exact reason.
Supply and demand, why didn’t I think of that. Thank you.
Thank you. I suspected that might have been it.
Due to market volatility, short-term loans are less stable than they used to be. This uncertainty is reflected in their pricing, resulting in higher rates compared to long-term fixed products.
Thank you, that makes a lot of sense.