Demand for adjustable rate mortgages (ARM) is increasing as homebuyers look for lower interest rates on loans and the share of ARM applications among total mortgage inquiries rises to its highest level in more than two decades, according to the Mortgage Bankers Association (MBA).
Mortgage applications to buy a home rose by 5 percent for the week ending May 6 on a seasonally adjusted basis compared to a week earlier, according to a May 11 MBA press release. On an unadjusted basis, applications rose by 5 percent on a weekly basis and dropped 8 percent when compared to the same week in 2021.
The ARM share of mortgage activity rose to 10.8 percent of total applications. At the start of 2022, when mortgage rates were near record lows, the ARM share of total applications was just 3 percent, but now that mortgage rates are rising, ARM shares are surging as well, with the 10.8 percent margin being the highest since March 2008.
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