Here are the current market expectations of Adjustable Rate Mortgage interest rates, based on the interest rate reset month.
This assumes the most common ARM coupon formula of: 1 Year Treasury rate + 2.25%.
Look for your reset date on the chart below to estimate your new interest rate level.
As of 2011-03-14
1 Year Treasury ARM
Rates are rounded to the neareset 0.125%
The financial markets estimate people's views of interest rates in the future, based on the concept of forward rates.
For example, there is a 1 year treasury yield today, and a 2 year treasury yield today.
- From this, we can can calculate the "implied forward rate", of the 1 year treasury in 1 year's time.
- Major corporations can even "guarantee" that rate, by buying various other financial instruments available today.
However, this does not guarantee that this is what the 1 year interest rate will be in 1 year's time. It is only a calculation based on current rates, which represent current views about financial markets.
- Many events can change people's views of the financial markets, and thus what actually happens to interst rates. For example, the size of the deficit, inflation, or how the economies of other countries are doing.