Latest news with #SOFR
Yahoo
a day ago
- Business
- Yahoo
ARM loan requirements in 2025
Adjustable-rate mortgage (ARM) loan requirements vary by the type of loan you get — whether conventional or government-backed — as well as the lender. You'll need to meet credit score, debt-to-income ratio and down payment requirements to qualify for an ARM home loan. An ARM could be worth it if you plan to live in your new home for only five to 10 years, moving before the fixed-rate introductory period ends. An adjustable-rate mortgage (ARM) is a home loan whose interest rate changes periodically after an introductory period. These changes can occur every six months or each year, depending on the loan terms. In contrast, a fixed-rate mortgage has an interest rate that stays the same over the loan's term. Here's what you need to know about ARM loan requirements if you're considering this type of mortgage in 2025. Many mortgage lenders rely on the Secured Overnight Financing Rate (SOFR) to determine the adjustments for ARMs. The yield on the one-year Treasury bill and the 11th District cost of funds index (COFI) are other common benchmarks. Qualifying for an adjustable-rate mortgage can be more difficult because you'll need enough income to make higher monthly payments if interest rates climb. But in other respects, ARMs have similar requirements to other types of mortgages. You'll need to provide information about your employment and income through paperwork such as pay stubs, tax returns, W-2s and other income documentation — for example, proof of child support. Learn more: Documents needed for mortgage preapproval You'll need a credit score of at least 620 to qualify for a conventional ARM. FHA ARMs have a lower threshold: 580, or 500 if you're prepared to make a 10% down payment. VA ARMs don't have a blanket credit score requirement, but many VA lenders look for at least 620. Generally, the DTI ratio for conventional ARM mortgage loans can't exceed 45 percent, though some lenders may approve borrowers with more debt who also have substantial cash reserves. Most FHA loans go to borrowers with DTI ratios of 43 percent or less, while the VA prefers borrowers with a ratio of 41 percent or less. In all cases, the lower the better when it comes to DTI ratios. Remember that borrowers qualify for ARMs based on their ability to cover a higher monthly payment, not the initial, lower payment. Like fixed-rate loans, you don't need to put 20 percent down on an ARM — but lenders do typically mandate higher down payments for them. While you can find fixed-rate loans that ask only 3 percent down, many lenders require at least a 5 percent down payment on conventional ARMs. An FHA ARM requires at least 3.5 percent. There's no down-payment requirement for most VA ARMs. Learn more: How much is a down payment on a house? In 2025, you can get a conforming ARM for up to $806,500, or as much as $1,209,750 if you live in a more expensive housing market. If you need a larger mortgage, some lenders offer jumbo or nonconforming loans with adjustable rates. These loans also generally require a higher credit score and down payment. An ARM can be worth considering if: You'll qualify for a lower initial interest rate than you would with a fixed-rate loan: ARMs tend to offer lower introductory rates than those for a comparable 30-year, fixed-rate loan, but the amount of savings can vary. You'll save money longer term: It's important to calculate how much you could save during the initial period of an ARM. For those taking out a jumbo loan, for example, an ARM can be the smart choice, since even a slightly lower interest rate can translate to a lot of money. This may offset the cost if you plan to refinance to a fixed-rate loan later. You plan on living in your home for just five to 10 years: An ARM often makes the most sense if you only plan on living in the home you're buying for around five to 10 years — before the loan's interest rate resets. Keep in mind that, while an ARM is essentially a bet that interest rates will decrease — and that your monthly payment will stay the same or shrink when your rate adjusts — it's impossible to know how rates will behave when your introductory period ends. While experts currently predict that rates will remain relatively stable for the rest of 2025, that's not a guarantee — and it doesn't reflect the rate environment in three, five, or even ten years. If you can't afford the highest possible payment on your ARM, you should consider a fixed-rate mortgage. Learn more: Pros and cons of adjustable-rate mortgages How does an ARM work? ARMs work by offering a lower, fixed interest rate for an introductory period. After that period is over, the rate changes once or twice per year for the remainder of the loan. The variable rate depends on a specific market index that the lender uses as a benchmark for its ARMs, moving up and down with that index. Adjustable-rate mortgages are limited in how much they can adjust the rate each time and over the loan's lifetime. What are the benefits of an ARM loan? The largest benefit of an ARM is that it typically offers a lower, fixed interest rate during its introductory period, usually between five and 10 years. If you think you'll move before that period ends, you can take advantage of the lower intro rate. If you don't move and keep the ARM, you'll be able to benefit from interest rate declines — unlike a fixed-rate mortgage-holder. What are the disadvantages of an ARM loan? Many ARMs require a higher down payment than their fixed-rate counterparts, and they can have stricter qualifications. But more significantly, the rate associated with your loan may increase, which will cause your monthly mortgage payments to go up. While there is a cap on the rate increases associated with your mortgage, higher payments can still cut into your budget. Sign in to access your portfolio
Business Wire
10-07-2025
- Business
- Business Wire
Capitolis Successfully Completes USD Swaptions LIBOR Transition to SOFR
NEW YORK--(BUSINESS WIRE)-- Capitolis, the financial technology company, announced today that it has successfully completed its run of multilateral exercises to transition legacy USD LIBOR-referenced swaptions to vanilla SOFR replacements for 17 global dealers. Through nine live executions, Capitolis, and Capitalab prior to its acquisition by Capitolis last year, facilitated the multilateral switching of over 17,000 legacy LIBOR swaptions across their dealer network. As a result, participants have eliminated the significant operational burden of expiry management associated with legacy LIBOR swaptions. Issues with pricing legacy USD LIBOR swaptions first became prominent in 2020, when major clearinghouses transitioned from Fed Funds to SOFR discounting for USD swaps. This led to bifurcation in the USD swaption market, introducing complexity and increased time demands for rates volatility desks. More recently, a major clearinghouse ceased support for clearing exercised legacy LIBOR swaptions on June 30, 2025, further increasing operational complexity for market participants. In response to client concerns about their remaining LIBOR swaption inventory, Capitalab (now Capitolis) worked closely with the dealer community to design and deliver a scalable solution. Within just two months, it launched a proof-of-concept run with nine dealers. Since then, nine successful multilateral runs have been completed, collectively transitioning over 17,000 trades. Participants are now left with a cleaner, simpler book of vanilla SOFR swaptions, significantly reducing complexity and ongoing operational risk. 'This initiative demonstrates the strength of collaboration across the industry and the power of innovation to solve real-world problems,' said Gavin Jackson, Co-Head of Portfolio Optimization, Capitolis. 'The successful transition of such a large volume of trades reflects the trust our clients place in Capitolis as well as their commitment to progress and willingness to work with us to achieve it. We're incredibly grateful for their support, engagement, and partnership to deliver this important solution at scale.' 'We're happy to have participated in this industry-wide effort led by Capitolis,' said Yashodeep Honmane, Head of US Rates Options, Barclays. 'Their multilateral solution delivered immediate operational relief, streamlined our swaptions portfolio ahead of the June 2025 clearinghouse cut-off, and drove meaningful efficiency gains. The process was collaborative, risk-reducing, and a clear demonstration of Capitolis' leadership in this space.' Most market participants now have few LIBOR swaptions remaining. Capitolis is prepared to run ad-hoc cycles based on additional demand. About Capitolis We believe the financial markets can and should work for everyone. Capitolis is the technology company helping to create safer and more vibrant financial markets by unlocking capital constraints and enabling greater access to more diversified capital and investment opportunities. Rooted in advanced technology and deep financial expertise, Capitolis powers groundbreaking financial solutions that drive growth for global and regional banks – and institutional investors alike. Capitolis is backed by world class venture capital firms, including Canapi Ventures, 9Yards Capital, SVB Capital, Andreessen Horowitz (a16z), Index Ventures, Sequoia Capital, Spark Capital, and S Capital, as well as leading global banks such as Barclays, Citi, J.P. Morgan, Morgan Stanley, Standard Chartered, State Street and UBS. Founded in 2017, our team brings decades of experience in launching successful startups, technology, and financial services. Capitolis was recognized on the Inc. 2024 Best in Business list in the Financial Services and Innovation & Technology categories, and named World's Best FX Software Provider for the second straight year in the 2024 Euromoney Foreign Exchange Awards. The company has been included on each of CNBC's World's Top Fintech Companies 2024 list and Deloitte's 2024 Technology Fast 500 list in consecutive years and was named to Fast Company's prestigious annual list of The World's Most Innovative Companies for 2023. American Banker recognized Capitolis among the Best Places to Work in Fintech, and the company was named by Crain's New York Business as one of New York's Best Places to Work in 2024 for the third consecutive year. For more information, please visit our website at or follow us on LinkedIn.
Yahoo
08-07-2025
- Business
- Yahoo
Inside the Fed's Quiet Signal on Where Rates Might Be Heading
The Fed researchers' latest deep dive: they're using LIBOR and SOFR derivatives to plot out the odds of the fed funds rate sliding back to zero. Think of it like reading tea leaves in the marketsby turning those contracts into daily probability curves, they can see how expectations and uncertainty shape the risk of hitting the zero lower bound (ZLB) again. Here's the scoop: on May 27, the market still put about a 9% chance on rates being back at zero seven years out. If everyone's betting on higher rates, that number fallsmakes sense. But bump up the uncertainty, and poof, the ZLB odds tick right back up. It's a pattern we saw around 2018, too. Why should you care? Because if rates ever do hit zero, the Fed's usual rate-cut toolkit is gone, and they have to lean on big, unconventional movesthink QE reboot. Even though rate forecasts are healthy now, plenty of wiggle room in those forecasts means we can't discount another ZLB run. Oh, and just so you know where the market stands today: the U.S. 7-year note yield recently popped up to about 4.16%. That's the backdrop to all these probability playshigher yields, higher expectations, but still a nontrivial chance that zero is back on the table down the road. This article first appeared on GuruFocus.
Yahoo
08-07-2025
- Business
- Yahoo
Inside the Fed's Quiet Signal on Where Rates Might Be Heading
The Fed researchers' latest deep dive: they're using LIBOR and SOFR derivatives to plot out the odds of the fed funds rate sliding back to zero. Think of it like reading tea leaves in the marketsby turning those contracts into daily probability curves, they can see how expectations and uncertainty shape the risk of hitting the zero lower bound (ZLB) again. Here's the scoop: on May 27, the market still put about a 9% chance on rates being back at zero seven years out. If everyone's betting on higher rates, that number fallsmakes sense. But bump up the uncertainty, and poof, the ZLB odds tick right back up. It's a pattern we saw around 2018, too. Why should you care? Because if rates ever do hit zero, the Fed's usual rate-cut toolkit is gone, and they have to lean on big, unconventional movesthink QE reboot. Even though rate forecasts are healthy now, plenty of wiggle room in those forecasts means we can't discount another ZLB run. Oh, and just so you know where the market stands today: the U.S. 7-year note yield recently popped up to about 4.16%. That's the backdrop to all these probability playshigher yields, higher expectations, but still a nontrivial chance that zero is back on the table down the road. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Arabian Post
30-06-2025
- Business
- Arabian Post
Loan Market Shrugs Off Middle East Strain
The US leveraged loan market has shown remarkable composure following escalations in the Middle East, with key price benchmarks holding steady and investors largely dismissing broader geopolitical implications. The average bid for the overall US leveraged loan market was 97.34 on 25 June, virtually unchanged from 97.18 on 16 June; similarly, the LPC 100 stood at 98.06, a slight uptick from 97.90 over the same period. Market participants cite the absence of direct effects on US corporates and interpret Iran's retaliation as measured, leaving technicals and deal flow as the primary market drivers. As one analyst commented, pricing geopolitical risk is challenging—and investors appear to be choosing their positions based on expected impact on balance sheets. Events elsewhere in April, such as sweeping tariffs, once rattled the syndicated loan market, halting activity and dragging average bids down to 95.84 from 98.22 earlier in the year. But current conditions paint a contrasting picture: secondary loan prices are resilient, and institutional issuance has picked up, surpassing US$109.9bn in the quarter even after April's freeze. ADVERTISEMENT Delving deeper into credit tiers reveals nuance. Loans in the lower 20th percentile saw week-on-week drops of about 10 points, while mid‑to‑top tier debt remained stable. Loans in aerospace, defence, and leasing sectors are trading near par, with bids between 99.875 and 100.375, benefiting from elevated attention to defence-linked assets. By contrast, energy names have lagged, trading down one to two points until news of a ceasefire helped stabilise that segment. Primary market momentum remains robust. Sixteen or more broadly syndicated deals launched in the week of 23 June, including the relaunch of ITG Communications' US$540m first-lien term loan. That issuance, aimed at funding a shareholder distribution postponed in April, repriced at 475bp over SOFR with a 0 per cent floor and 98 OID—mirroring its earlier terms. Amid this backdrop, attention turns to prospective Federal Reserve rate cuts. Federal Reserve Chair Jerome Powell's recent testimony emphasised a likelier move in September rather than July, which market analysts believe could reduce borrowing costs and support further deal activity. One portfolio manager noted that such easing would benefit overleveraged issuers contending with rising interest burdens. Still, voices from academia warn of deeper structural issues. A study from the University of Bath highlights systemic risks arising from underpriced leveraged loans, particularly among non‑bank lenders issuing covenant‑lite products. With default rates at their highest in four years—7.2 per cent to October 2024—researchers suggest that weakened risk premiums and rising securitisation heighten macro‑prudential concerns. They argue that shadow banks and opaque loan structures may fuel unseen vulnerabilities should stress propagate across leveraged borrowers. Despite these warnings, the current market display indicates short‑term confidence. Investors are focusing on deal cadence, technical liquidity, and monetary policy outlook rather than geopolitical shock risk. Secondary prices remain robust, and primary issuance continues apace—even in the shadow of Middle East tensions that might otherwise unsettle global credit markets.
