A Freddie Mac survey released Friday found that starting rates for conforming 1-year Adjustable Rate Mortgages (ARM) averaged 1.76 percentage points above the rates of other loans, the largest rate premium observed since Freddie Mac began collecting ARM data in 1984,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Further, rates on 30-year fixed-rate mortgages had fallen to 50-year lows and were near or below initial rates on ARM products. As a consequence, by December 2008 the ARM share of loan applications had fallen to 3 percent, the lowest recorded in our survey. With low consumer interest in ARMs, fewer lenders were offering ARM products. It's worth noting that the Adjustable Rate Mortgage has become the bane of many homeowners who saw their rates adjust at the three or five year periods of the loan and were unable to make the increased payments. Whether lenders are offering fewer ARM mortgages because borrowers have shunned them or because lenders lost an arm and a leg on them is a debatable if moot point. Source Freddie Mac news release.
No comments:
Post a Comment