Mortgage

Borrowers start to reconsider adjustable-rate mortgages

Adjustable-rate mortgages are starting to look more appetizing due to the rapid increase in mortgage rates, an article in the Daily Finance said.

The average mortgage rate dramatically increased from below 3.5% to well above 4.5% compared to ARMs, which have stayed below 3%.

In result, the share of adjustable-rate mortgages rose to its highest level since July 2008, the article stated.

But before borrowers jump on board the lower interest rates, they need to realize that the interest rate is subject to change throughout the life of the loan. 

The short-term interest rates on which ARMs are based are still near record lows despite the run-up in other mortgage rates, but economists believe that eventually, those short-term rates will follow suit.

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