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More borrowers are turning to shorter-term adjustable-rate mortgages as interest rates rise, but that may be a riskier move than your clients realize. While these mortgages offer<\/a> lower interest rates, the rates reset after a certain preset time. Still, a five-year hybrid adjustable-rate mortgage<\/a> averaged a 3.28 percent rate last week compared to 4.30 for the 30-year fixed-rate mortgage, according to Freddie Mac’s weekly mortgage market survey.<\/p>\n The share of ARMs in total mortgage application volume has doubled to 9 percent since November 2016. This marks the highest level of ARM applications since October 2014. “Home buyers in a strong housing<\/a> market are looking for ways to extend their purchasing power, and ARMs are one way to do that,” says Mike Fratantoni, chief economist for the Mortgage Bankers Association. “While the ARM share got as high as 35 percent pre-crisis, it is really unlikely it will get nearly as high now, given [new] regulations, which effectively prohibit many types of ARMs that were prevalent then.”<\/p>\n Total mortgage application volume\u2014including for home purchases and refinances\u2014dropped 2.7 percent compared to the previous week, the MBA reports. Applications are now nearly 12 percent lower than a year ago. Broken out, refinance applications dropped 3 percent last week, while applications for home purchases fell 2 percent. Applications for home purchases, however, remain up 5 percent compared to a year ago, the MBA reports.<\/p>\n Source: \u201cMortgage Applications Fall 2.7%, as Borrowers Turn to Riskier Loans<\/a>,\u201d CNBC (March 22, 2017)<\/em><\/p>\n<\/div>\n<\/div>\n [ad_2]
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