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Adjustable-Rate Mortgage (ARM)

RECENT NEWS
Stricter rules for adjustable-rate mortgages
MarketWatch  Jan 10  Comment 
New rules could make ARMs safer for borrowers -- but also harder to get.
Banks Rigged Libor To Inflate Adjustable-Rate Mortgages: Lawsuit
Forbes  Oct 15  Comment 
The housing crisis left banks with a very messy problem. Throw in a Libor scandal and the mess gets even uglier.
Mortgages: Adjustable-rate mortgages hit record lows
MarketWatch  Nov 23  Comment 
Rates on adjustable-rate mortgages hit record lows, while the 30-year fixed-rate mortgage fell below 4% again this week, according to Freddie Mac’s weekly survey of conforming mortgage rates.
Freddie Mac Reports Adjustable-Rate Mortgages Hit Record Lows as 30-Year Fixed-Rate Mortgage Averages 3.98%
StreetInsider.com  Nov 23  Comment 
Adjustable-Rate Mortgages Hit New Low
TheStreet.com  Jul 28  Comment 
// --> NEW YORK (RateWatch) -- Loan rates keep falling, and consumers who have long spurned adjustable-rate mortgages may want to take a second look. ...
Mortgages: More Borrowers Are Opting for Adjustable-Rate Mortgages
New York Times  Mar 17  Comment 
This time around, mortgage experts say, lenders are offering more conservative ARM products, without the gimmicky “teaser” rates and features.
Mortgages: Rethinking Adjustable-Rate Mortgages
New York Times  Aug 29  Comment 
With the economy still weak, borrowers may want to hold onto their adjustable-rate mortgages a little longer.
Adjustable Rate Mortgages Could Fuel The Next Wave Of Foreclosures
InvestorCentric  Jun 19  Comment 
The record number of foreclosures may not include a large pool of adjustable rate mortgages that are scheduled to increase in the next few years. This ticking time bomb could cause an aftershock of foreclosures hitting the market in the future,...
Be Careful: Reset of Subprime Adjustable Rate Mortgages will Peak this Month
Kathy Lien  Sep 25  Comment 
The amount of subprime Adjustable Rate Mortgages will peak this month. According to the following NY Times chart, the $50 billion in subprime ARM have already begun to be reset to market rates. This is the largest amount on record and suggests...




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Jason Young

Adjustable Rate Mortgages (ARMs), which have become notorious in recent years with the fall of the housing bubble in 2007, are available in 1, 3, 5, 7 and 10 year terms. These mortgages have a fixed rate of interest for during their initial period, after which the rate adjusts based on whatever index the loan is tied to. During the initial period, the borrower pays a lower rate of interest. For instance, the 5yr ARM may have an interest rate of 5% vs. 5.5% for a 30yr fixed mortgage. At the end of the 5 years however, the interest rate is no longer fixed and is reset. If libor is 7%, then the borrower pays 7%. These mortgages can be cheaper than 30yr fixed mortgages, especially in the beginning, but are also riskier. Money Shop Loans

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