ARM borrowers match loans to their uncertainty tolerances

Article Abstract:

More borrowers are availing of adjustable-rate-mortgage (ARM) products that feature longer initial-adjustment periods. This growing borrower preference for products that neutralize the unpredictability of the ARM has led to a broader array of ARM alternatives. This was confirmed by the 15th annual ARM survey conducted by the Federal Home Loan Mortgage Corp. The survey showed that longer-term alternatives such as the 5/1, 7/1 and 10/1 ARM are now being offered by mortgage lenders eager to allay borrower concerns about interest rate trends.

Regulation, Licensing, and Inspection of Miscellaneous Commercial Sectors, Mortgage Bankers, Real Estate Credit, Bank Services Regulation, Banking industry, Economic aspects, Services, Prices and rates, Interest rates, Mortgage banks, Freddie Mac, Banking law

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All about ARMs

Article Abstract:

The US Federal Home Loan Mortgage Corp's survey on adjustable-ratemortgages (ARM) revealed that teaser-rate pricing is fast becoming a dying practice. The study, which covered 121 lending insitutions, examined 1-year and3-year ARMs with respect to its initial period rate, points, margin, fully indexed rate, initial period discount, and fixed-rate mortgage/ARM spread. The differences in ARM rates between lenders suggests that ARM borrowers may avail of lower rates if they do some shopping prior to choosing an ARM.

Loan brokers, Reports, Federal Home Loan Mortgage Corp.

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