Why Adjustable-Rate Mortgages Are Making a Comeback

This chart shows that the share of home buyers turning to adjustable rate mortgages has doubled from about a year and a half ago. These loans start with a fixed rate for a set period, usually 5, 7, or 10 years, before adjusting to a new market rate and resetting once every 6 months or a year. The initial fixed rate is typically lower than the 30-year fixed mortgage.Their rising popularity comes down to short-term cash flow. With fixed rates around 6%, an ARM clocks in at about 5.5% initially. While rates ha ...