Monkeys,
Wife and I bought a new build that won't be delivered until spring 2023. So price is locked, rate isn't. I can do a 360-day rate lock for about $10K @ ~4.5% 10/1 ARM. I'll get a one time float down 90-days from close so rate could potentially be lower.
For anyone that works in the bond/credit markets is this a hedge worth paying for or what are you seeing out there? I realize this is a broad question and I look at forward 10yr curves daily stressing and guessing. Who knows what the Fed will end up doing but the uncertainty alone is eating at me.
Anyone here in a similar position or gone through this recently? I'm leaning towards locking rate and just getting piece of mind.
Thoughts?
What’s the spread versus a 30 year fixed assuming it’s available? What are the adjustment caps? What level of leverage?
Relatively straight forward calc here - take the fwd 10 year, add the typical spread home mortgage is over, calc the difference between the locked in 4.5 and what you’d be paying according to the spread, is that saving more than the $10k rate lock price? I would caveat here, interest rate hedging markets are typically very efficient so fighting the market isn’t always the wisest decision, but times are weird now so who really knows.
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