Over the past recent weeks, I have received some calls and emails from client's and Realtor's regarding the relationship between hybrid ARM and fixed rate mortgages here in the Raleigh market. The specific question is why is the relationship between the two seems to be changing so dramatically. The answer is very simple. In the past several weeks, some very large real estate investment trusts (REITs) - (I prefer not to name them but they were big) they received margin calls from their creditors and to meet those margin calls, assets must be $old. What sort of assets do these REITs hold that they must sell? Hybrid ARMs. Tens of BILLIONS of dollars worth of hybrid ARM either have come to market in the past week or are about to and this supply wave is crashing down on a market, hence one reason for the gap.
This is an unusual time and unusual things happen during unusual times...Folks, yes, hybrids ARMs are slightly higher as compared to 30 year fixed. So? This does not change the fact that now is a great time to re-fi, move-up or buy your first home. The 30 year fixed, historically-speaking, is at a great rate. There are some great deals in Raleigh and the 30 year is below 6%. Use these unusual times...it is a great time to buy!