Lost in all the wailing over Fed funds rate, a stimulus plan, the election, and bank rights off has been perhaps the most important news facing home owners with ARM's.
The LIBOR rate, the interest rate that most adjustable rate mortgages are tied to has fallen from a multi year high of near 6% in early 2007 to a level of 3.9%, the lowest since Sept. 2005.
What this means is that the $385 billion in mortgages tied to it that will reset in 2008 will do so at far lower levels than homeowners were looking at less than a year ago. Of all the news we have been assaulted with in the past three weeks, this news is what really matters most.
While Bernanke has been constantly criticized by stock investors this months, his actions at the Fed ought to be cheered by homeowners. The stabilizing of this market will help all our home values and in turn our stock portfolios.
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