Now that the first of the subprime ARM pools have reset into the heart of the Federal Reserve Board's quarter point rate increases, preliminary studies are showing them to be performing relatively well.

In a report last week, analysts with Credit Suisse First Boston tested a pool of 2/28 hybrid ARMs originated in 4Q02 and 1Q03, and found that the higher credit quality borrowers experienced the highest payment increase after the first rate reset. "Basically, those who can absorb it the most got hit the hardest," said Rod Dubitsky, head of ABS research for CSFB.

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