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ARMs: A Thing of the Past?

  • February 24th 2009

by Mark Wellborn

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A recently-released report from Freddie Mac shows 97 percent of borrowers who refinanced adjustable rate mortgages last quarter chose to go with a fixed-rate mortgage instead of an ARM, according to the Washington Business Journal. The article also noted that 99.7 percent of homeowners who refinanced fixed-rate mortgages in the same quarter went with the fixed-rate option again.

The main reason for this trend is fairly obvious: People are choosing to lock in a historically low rate for the long-term rather than deal with the uncertainty of an ARM.

From the WBJ:

“The very low interest rates for fixed-rate loans compared with ARM rates in the fourth quarter, combined with worries that rates may rise in the future when the economic recession ends, enticed refinancing borrowers to seek the security of long-term fixed-rate mortgages,” said Freddie Mac chief economist Frank Nothaft in a statement.

This article originally published at http://dc.urbanturf.production.logicbrush.com/articles/blog/arms_a_thing_of_the_past/572.

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