According to the most recent report from Freddie Mac, 95% of refinanced mortgage loans are fixed-rate products. Adjustable rate mortgages appear to have become wildly unpopular.
Frank Nothaft, chief economist for Freddie Mac attributes the shift to two factors: ultra-low fixed interest rates and a desire for predictability of monthly payments (peace of mind). As of the end of last week, the average rate for a 30-year fixed-rate mortgage was a mere 4.97 percent.
Although two-thirds of loan applications are currently refinance loans, not new loans, the National Association of Realtors claims that the low fixed rates are primarily responsible for the recent improvement in sales of existing homes.
Monday, February 15, 2010
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What is the benefit to getting an ARM in the first place? Do they historically come with a lower initial rate?
ReplyDeleteYes, you are exactly right. Typically, an ARM will have a below-market interest rate for the first three or five years. After that, the rate will start adjusting upward, ending up at a higher-than-market rate.
ReplyDelete- Craig Everett