Adjustable-Rate Mortgages Make a Comeback

March 17, 2014
Wall Street Journal 
mortgage lending news
Adjustable-rate mortgages (ARMs) are riding a new wave of popularity. Some financial groups are even sweetening terms to attract more customers to these loans, whose rates can jump after a few years.

The tactics recall a period prior to the 2008 economic meltdown when ARMs flourished as banks and mortgage brokers touted their low initial rates to the public. Now, though, financial executives insist that they are focusing on borrowers with strong credit who are using the option for "jumbo" mortgages -- not subprime borrowers who could not afford the loans after the rates reset.

ARMs made up 31 percent of mortgages in the $417,001-to-$1 million range that were originated during last year's October-through-December period, notes Black Knight Financial Services. That is an increase from 22 percent during the same period a year prior and the largest share since 2008's third quarter.

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