I’m having 2008 flashbacks

Adjustable-rate mortgages (ARMs) are making a comeback as interest rates skyrocket. Okay but these are the buggers that caused a lot of trouble during the 2008 housing crisis. Have we not learned our lesson??

Adjustable-rate mortgages offer a lower interest rate than 30-year fixed-rate mortgages. But only for a three-to-five-year period, at which time they adjust to whatever the baseline interest of the day may be. This is risky. If you’d secured one five years ago, you’d be paying nearly 6% on your mortgage now because interest rates are so high. For someone like that, it would significantly jump their monthly mortgage payment!

But, ARM applications are up 10% from last week, which brought mortgage applications back up from a slump, up 8%. I hope these ARM applicants know what they’re doing…

Share this article

Related Articles

Join the mailing list

Get the daily email that makes reading the investment news actually enjoyable.

Scroll to Top