Adjustable-rate mortgages are staging a comeback as buyers seek lower rates

Core Insights - Demand for adjustable-rate mortgages (ARMs) has surged, making up 12.9% of all mortgage originations last week, marking a post-crisis high [1] - ARMs offer lower initial rates compared to 30-year fixed-rate mortgages, with a 7/6 ARM averaging 5.78% versus 6.35% for a 30-year fixed mortgage [2] - Many potential homebuyers are willing to accept the risks associated with ARMs due to high home prices and elevated mortgage rates [4] Industry Trends - The interest in ARMs has increased as prospective clients show curiosity, with some mortgage brokers noting a rise in inquiries [5] - Historically, ARMs accounted for up to one-third of overall loan volume before the 2008 financial crisis, but fell to less than 1% by late 2008 [6][7] - The resurgence of ARMs in 2022 was brief, driven by rising interest rates, but they are now gaining traction again as borrowers seek more affordable options [7]