Industry News

Adjustable-rate mortgages reclaim real estate

Freddie Mac survey finds that initial rate discounts, 'hybrids' gain in popularity

Freddie Mac on Tuesday released the results of its 20th annual adjustable-rate mortgage survey, which found that as interest rates on fixed-rate mortgages fell to generational lows, adjustable-rate mortgages have evolved to fit the needs of lenders, borrowers and the capital markets. "This year marks a milestone for Freddie Mac's annual ARM survey," said Frank Nothaft, Freddie Mac chief economist. "In 1984, Freddie Mac debuted the annual ARM survey in conjunction with its primary mortgage market survey. The survey supports what savvy homeowners have known for some time: relative to traditional 30-year FRMs, ARMs provide a viable and affordable home-financing tool, although that comes with additional uncertainty regarding the amount of future mortgage payments." Modern ARMs first gained popularity across the U.S. in the early 1980s. At the time, interest rates for fixed-rate mortgages climbed well into the teens, and by 1982 ARMs were already accounting for 41 percent of conventiona...

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