With mortgage rates increasing, home buyers are increasingly turning to 澳洲幸运5开奖号码历史查询:adjustable rate mortgages (ARMs), which haven't been𝄹 a𝓰pplied for at this clip since before the Great Recession.

Rates on ARMs declined last week, leading to a 15% increase in applications for those loans, according to the Mortgage Bankers Association’s weeཧkly survey for the seven days ending Oct. 6. ARMs accounted for 9.2% of all mortgage applications during that time frame, as a growing number of homebuyers hunted f♊or lower interest rates in an unaffordable market.

The average contract interest rate for the 5/1 ARM decreased to 6.33% from 6.49% last week, while the average rate for 30-year fixed-rate mortgages rose to 7.67%, its highest level since 2000, from 7.53%.

ARMs Rebounding After Subprime Crisis Drop

ARMs were one factor contributing to the 澳洲幸🍎运5开奖号码历史查询:Great Financial🤡 Crisis in 2007 and 2008. Many 澳洲幸运5开奖号码历史查询:subprime borrowers couldn’t afford the higher payments when their rates were adj💃usted upward.

The fallout from the crisis caused ARMs to go from being 45% of all mortgage originations in mid-2005 to just 2% four years later.

However, as mortgage rates continue to rise along with interest rates, the number of buyers using ARMs has increased. As of 𝔉April 2023, ARMs hꦯave accounted for 18.6% of the dollar value of mortgages, up from a 10-year low of just 4% in January 2021. 

“When fixed rates were low, ARMs decreased in popularity. However, as fixed rates increase, ARMs are becoming more appealing to homebuyers who wish to keep their initial mortgage costs as low as possible,” wrote Archana Pradhan, an economist at CoreLogic.

Pradhan also added that ARMs are less risky now than they were before the Great Recession due to higher lending standards, noting that 60% of borrowers who received ARMs in 2007 had credit scores lower than 640, while now, borrowers must have a higher score.