As interest rates have continue to increase, borrowers are becoming less interested in fixed-rate mortgages and more interested in adjustable-rate mortgages.
Freddie Mac’s weekly Primary Mortgage Market Survey report showed fixed mortgage rates have begun to level off after several months of sharp increases connected to the Federal Reserve’s increase in interest rates to fight inflation.
Despite recent moderations in fixed rates, interest in adjustable rates has continued to see recent growth.
During the 2008 financial crisis many adjustable-rate mortgages went into default with 90-day delinquency and foreclosure rates reaching as high as 25 percent by May of 2008.
Since the 2008 crisis, regulators have increased scrutiny of adjustable-rate mortgages. This often includes greater information collection prior to credit approval and better assurances the person getting the mortgage has sufficient income to make payments at the highest possible interest rates, not just introductory rates.
According to the Mortgage Bankers Association, the number of applications for adjustable-rate mortgages has increased by 22 percent over the last year.