As public alarms thunder around them, thousands of U.S. homeowners are dumping adjustable-rate mortgages whose teaser interest rates are about to expire.
It's a veritable ARMS race, as borrowers exchange loans due to reset to higher monthly payments for fixed-rate loans with static monthly payments.
Fixed-rate mortgages have regained market supremacy.
They accounted for 79.9% of loan applications in the week ending Jan. 26, according to the Mortgage Bankers Association, following warnings from consumer advocates and federal regulators that $1 trillion in adjustable-rate mortgages may jump to unaffordable levels this year.
"People who got into ARMs at 4.5% interest are now seeing their rate reset at 8.25% and up," said Terri Darling, president of FieldCrest Mortgage Corp. in Waukesha. "A lot more see their reset coming in six to eight months and don't want to get caught."
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