ARMs Were Risky During the Housing Crisis. Will They Become Popular Again?

Douglas Rissing/Getty Images In the thick of economic uncertainty and high interest rates, adjustable-rate mortgages are making a comeback. ARMs offer cheaper fixed interest rates for the initial five, seven or 10 years, giving borrowers more options for homeownership. After that introductory period, the loan has a variable interest rate that could go up or down, depending on market conditions. The share of loan applications for ARMs recently rose to its highest level in 17 months, according to the Mortgage Bankers Association. These types of mortgages, often considered riskier than traditional fixed-rate options, haven't been popular for a while. Maligned as subprime mortgage products during the 2008 housing market crash, they've been somewhat blacklisted since the Great Recession. Yet homebuyers, desperate to secure lower interest rates, are taking the gamble. Last week, as market turmoil over tariffs sent bond yields and mortgage rates higher, the interest rate for a 5/1 ARM wa ... Read full article.