The Borrower\'s Bible The number of adjustable rate mortgages (ARMs) up for reset is set to peak this fall, with an estimated $50 billion worth poised to adjust to higher rates in October. The housing and credit markets are bracing for another blow, but recent trends may mean the reset shock will be less painful than expected, especially if the Federal Reserve drops its Fed Funds rate. Many economists believe there’s a good chance the Federal Reserve will begin to lower the Fed Funds rate next week. Doug Duncan, the chief economist with the Mortgage Bankers Association predicts the rate will drop a quarter percentage point at each of the next two Fed sessions. The yields on [tag]short-term Treasury bills[/tag] tend to follow the same direction as the Fed Funds rate, so ARM reset rates could drop even further into affordable territory.

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