It is only a matter of time before the major ARM indicies begin to rise.  Once they do, many homeowners who have been trying to time the market are going to get caught in a much higher rate than they should have.  All the signs point to this being the trough for interest rates.  Barring some worldly disaster…party is over.  It is time to lock in your 30 year fixed or forever be an ARM holder.   Most ARMs are tied to the 12 month LIBOR which is down around .8% .  This has been fantastic for most ARM holders who have seen their fully indexed rates be locked in near the low 3’s for another 12 months.  The pain is going to be felt however when the LIBOR trends back to its 5 year average of 3.8%.  Most margins are 2.25% so home owners who were enjoying their 3% rate will be up to 5% and then to 6.25% by the time the rise is over.  I wouldn’t be suprised to see LIBOR hit 5 to 6 and those ARMs restet to the 8% range if any inflation fears come true.  Moral of the story…refinance your ARM asap.