From CNBC.com…
Adjustable-rate mortgages are making a comeback.
With interest rates surging, more buyers are turning to ARMs, which offer lower initial rates than fixed-rate loans. However, after a certain period, the rate on the ARM adjusts to reflect current market conditions.
“You have double the number of borrowers out there applying for ARMs in the last four months because of how quickly the rates have come up,” said Joel Kan, associate vice president of economic and industry forecasting at the Mortgage Bankers Association.
The rate for a 30-year fixed rate mortgage is 5.41%, according to Mortgage News Daily. Meanwhile, the rate for a 5/1 ARM is 4.38%. The “”5” means the rate is fixed for five years and the “1” means it would then readjust once every year for the remaining life of the loan.
“Clearly people are looking for other options when it comes to financing their home, because they are competing with other borrowers and they are likely looking to secure the home that they want, given how tight housing inventory is,” Kan said.
