WASHINGTON–The number of homebuyers who are considering adjustable rate mortgages has doubled since the presidential election, according to one new analysis, which notes the types of ARMs being considered differ from those that infamously led to the housing crash.
According to the Mortgage Bankers Association, its latest survey found that 9% of total home loan applications were for ARMs, a level that is twice that seen since the first week of October and the highest level seen since October 2014.
Analysts suggested that the reasons go beyond slowly rising mortgage rates and are related to tight housing inventories that have led to bidding wars in which prospective buyers feel they need to increase their offers, and then seek a lower rate.
The MBA said the average rate for 30-year fixed-rate mortgages was 4.46% last week, while the 30-year fixed-rate loan backed by the FHA, which is often used by first-time homebuyers, increased to 4.33% from 4.29% the week before. By contrast, the average rate for a 5/1 ARM — fixed rate for five years and variable after that — fell to 3.41% from 3.45%, the MBA said.