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Adjustable Rate Mortgages Become Almost Non-Existent
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You're Now Reading:
Adjustable Rate Mortgages Become Almost Non-Existent
The Easy Way to Shop For a Mortgage Loan
Fill Out One Questionnare
Receive Multiple Offers. Save Money.
The Easy Way to Shop For a Mortgage Loan
Fill Out One Questionnare
Receive Multiple Offers. Save Money.
You're Now Reading:
Adjustable Rate Mortgages Become Almost Non-Existent
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January 19, 2011 (Chris Moore)
mortgage-adjustable-rate-image
Adjustable Rate Mortgages (ARMs) that had become the mortgage of choice during the housing boom has become virtually non-existent as a mortgage option today. In a report released by the Federal Reserve, the once mighty ARM which was the choice of 70 percent of all borrowers in 2004, now only commands seven percent of the mortgage market.

The report, released by the New York Federal Reserve, believes there are two theories for the once mighty loan’s fall.

One, was that when the securitized mortgage market collapsed in 2008, a place where ARMs were predominate, homebuyers had less access to these products.

But the NY Fed’s second theory coincided with what Freddie Mac Chief Economist Frank Nothaft found: Homebuyers were simply more aware of the risk.

“Households have become more risk averse following the publicity given to high default rates on subprime ARMs, and the reports of ‘payment shock’ associated with interest rate resets on ARMs,” the NY Fed said in its report.

And if they didn’t hear it from the news, they heard from their many friends and family members who took out these risky loans only to lose their homes two or three years later when the rates adjusted to market conditions.

And as recently as 2009, ARM’s had fallen to just three percent market share, with government mortgage giant Freddie Mac stating it is doubtful the mortgage product will return to those glory days of 2004 any time soon.

This survey also found the most popular product is the 5/1 ARM, with 96 percent offering it. The 3/1 ARM is offered by 71percent, the 7/1 ARM by 64 percent, and only 9 percent of lenders surveyed offered a 3/3 ARM, which adjusts once every three years. The one-year conforming ARM is offered by only 45% of ARM lenders.

Nothaft added that if fixed-rate loans currently continue to stay at such low levels, that homebuyers do not see the incentive for ARMs, which are only slightly lower. The NY Fed drew a similar conclusion as well, citing historical patterns that showed borrowers preferred fixed-rate loans over ARMs when both were advertising low rates.

However, Nothaft expects ARMs to gradually gain back favor with some borrowers, possibly rising to an average 9% market share by the end of 2011. And if interest rates should start to climb beyond current expectations, you can expect to see them become a more popular alternative to fixed rate loans.

Let’s all hope we learned from the last time…

Tags: adjustable rate mortgages, mortgage, arm, fixed rate loans, mortgage market, housing boom, interest rate, subprime, market share

FILL OUT THE FORM
It all starts here. Select the loan product you want to apply for and complete the subsequent questionnaire.
WE VERIFY & TRANSMIT TO LENDERS
Once we receive your completed questionnaire we verify a couple vital pieces of information and direct your information to our network of lenders, all within minutes.
REVIEW YOUR OFFERS
With offers in hand you can now compare rates and costs and get the best possible deal. Comparison shopping made easy. You fill out one form and lenders compete for your business.
CHOOSE YOUR LENDER
Congratulations! With the great learning tools we provide for you at MortgageLoanRateUpdate and the offers you have received, you've found the right product and the best rate.
HOW
MORTGAGELOANRATEUPDATE
WORKS
Whether you're looking to refinance your current loan, purchasing a new home or looking for a home equity loan, we make it easy at Mortgageloanrateupdate. Our questionnaire is simple and quick to use and your information is safely transmitted to us with SSL encryption. With just two minutes of your time, you could have multiple lenders competing for your business which could save you thousands.
ADVANTAGES OF USING
MORTGAGELOANRATEUPDATE
FAST & EASY. DATA ENCRYPTED
Applying to multiple lenders is fast and easy with our one simple questionnaire. Choose the product you’re looking for, take a few moments to answer a few questions and you’re on your way to saving.
NO OBLIGATION. NO HIDDEN FEES
Any of the services on our website are 100% free, there is no obligation to use our services or any hidden fees. We’re not loan brokers so we don’t charge broker fees like other websites.
NO SSN OR CREDIT CHECK
No SSN or credit check is necessary to use our services. We bring lenders to you so they can compete for your business and you save. That information only becomes necessary after you choose a lender.
Home Buying
Tips
Home Selling
Tips
About
Mortgages
Mortgage
Calculator
Mortgage
Rates

January 19, 2011 (Chris Moore)
mortgage-adjustable-rate-image
Adjustable Rate Mortgages (ARMs) that had become the mortgage of choice during the housing boom has become virtually non-existent as a mortgage option today. In a report released by the Federal Reserve, the once mighty ARM which was the choice of 70 percent of all borrowers in 2004, now only commands seven percent of the mortgage market.

The report, released by the New York Federal Reserve, believes there are two theories for the once mighty loan’s fall.

One, was that when the securitized mortgage market collapsed in 2008, a place where ARMs were predominate, homebuyers had less access to these products.

But the NY Fed’s second theory coincided with what Freddie Mac Chief Economist Frank Nothaft found: Homebuyers were simply more aware of the risk.

“Households have become more risk averse following the publicity given to high default rates on subprime ARMs, and the reports of ‘payment shock’ associated with interest rate resets on ARMs,” the NY Fed said in its report.

And if they didn’t hear it from the news, they heard from their many friends and family members who took out these risky loans only to lose their homes two or three years later when the rates adjusted to market conditions.

And as recently as 2009, ARM’s had fallen to just three percent market share, with government mortgage giant Freddie Mac stating it is doubtful the mortgage product will return to those glory days of 2004 any time soon.

This survey also found the most popular product is the 5/1 ARM, with 96 percent offering it. The 3/1 ARM is offered by 71percent, the 7/1 ARM by 64 percent, and only 9 percent of lenders surveyed offered a 3/3 ARM, which adjusts once every three years. The one-year conforming ARM is offered by only 45% of ARM lenders.

Nothaft added that if fixed-rate loans currently continue to stay at such low levels, that homebuyers do not see the incentive for ARMs, which are only slightly lower. The NY Fed drew a similar conclusion as well, citing historical patterns that showed borrowers preferred fixed-rate loans over ARMs when both were advertising low rates.

However, Nothaft expects ARMs to gradually gain back favor with some borrowers, possibly rising to an average 9% market share by the end of 2011. And if interest rates should start to climb beyond current expectations, you can expect to see them become a more popular alternative to fixed rate loans.

Let’s all hope we learned from the last time…

Tags: adjustable rate mortgages, mortgage, arm, fixed rate loans, mortgage market, housing boom, interest rate, subprime, market share

FILL OUT THE FORM
It all starts here. Select the loan product you want to apply for and complete the subsequent questionnaire.
WE VERIFY & TRANSMIT TO LENDERS
Once we receive your completed questionnaire we verify a couple vital pieces of information and direct your information to our network of lenders, all within minutes.
REVIEW YOUR OFFERS
With offers in hand you can now compare rates and costs and get the best possible deal. Comparison shopping made easy. You fill out one form and lenders compete for your business.
CHOOSE YOUR LENDER
Congratulations! With the great learning tools we provide for you at LoanRateUpdate and the offers you have received, you've found the right product and the best rate.
HOW
MORTGAGELOANRATEUPDATE
WORKS
Whether you're looking to refinance your current loan, purchasing a new home or looking for a home equity loan, we make it easy at MortgageLoanRateUpdate. Our questionnaire is simple and quick to use and your information is safely transmitted to us with SSL encryption. With just two minutes of your time, you could have multiple lenders competing for your business which could save you thousands.
ADVANTAGES OF USING
MORTGAGELOANRATEUPDATE
FAST & EASY. DATA ENCRYPTED
Applying to multiple lenders is fast and easy with our one simple questionnaire. Choose the product you’re looking for, take a few moments to answer a few questions and you’re on your way to saving.
NO OBLIGATION. NO HIDDEN FEES
Any of the services on our website are 100% free, there is no obligation to use our services or any hidden fees. We’re not loan brokers so we don’t charge broker fees like other websites.
NO SSN OR CREDIT CHECK
No SSN or credit check is necessary to use our services. We bring lenders to you so they can compete for your business and you save. That information only becomes necessary after you choose a lender.

January 19, 2011 (Chris Moore)
mortgage-adjustable-rate-image
Adjustable Rate Mortgages (ARMs) that had become the mortgage of choice during the housing boom has become virtually non-existent as a mortgage option today. In a report released by the Federal Reserve, the once mighty ARM which was the choice of 70 percent of all borrowers in 2004, now only commands seven percent of the mortgage market.

The report, released by the New York Federal Reserve, believes there are two theories for the once mighty loan’s fall.

One, was that when the securitized mortgage market collapsed in 2008, a place where ARMs were predominate, homebuyers had less access to these products.

But the NY Fed’s second theory coincided with what Freddie Mac Chief Economist Frank Nothaft found: Homebuyers were simply more aware of the risk.

“Households have become more risk averse following the publicity given to high default rates on subprime ARMs, and the reports of ‘payment shock’ associated with interest rate resets on ARMs,” the NY Fed said in its report.

And if they didn’t hear it from the news, they heard from their many friends and family members who took out these risky loans only to lose their homes two or three years later when the rates adjusted to market conditions.

And as recently as 2009, ARM’s had fallen to just three percent market share, with government mortgage giant Freddie Mac stating it is doubtful the mortgage product will return to those glory days of 2004 any time soon.

This survey also found the most popular product is the 5/1 ARM, with 96 percent offering it. The 3/1 ARM is offered by 71percent, the 7/1 ARM by 64 percent, and only 9 percent of lenders surveyed offered a 3/3 ARM, which adjusts once every three years. The one-year conforming ARM is offered by only 45% of ARM lenders.

Nothaft added that if fixed-rate loans currently continue to stay at such low levels, that homebuyers do not see the incentive for ARMs, which are only slightly lower. The NY Fed drew a similar conclusion as well, citing historical patterns that showed borrowers preferred fixed-rate loans over ARMs when both were advertising low rates.

However, Nothaft expects ARMs to gradually gain back favor with some borrowers, possibly rising to an average 9% market share by the end of 2011. And if interest rates should start to climb beyond current expectations, you can expect to see them become a more popular alternative to fixed rate loans.

Let’s all hope we learned from the last time…

Tags: adjustable rate mortgages, mortgage, arm, fixed rate loans, mortgage market, housing boom, interest rate, subprime, market share

Home Buying Tips
Home Selling Tips
About
Mortgages
HOW
MORTGAGELOANRATEUPDATE
WORKS
FILL OUT THE FORM
It all starts here. Select the loan product you want to apply for and complete the subsequent questionnaire.
WE VERIFY & TRANSMIT TO LENDERS
Once we receive your completed questionnaire we verify a couple vital pieces of information and direct your information to our network of lenders, all within minutes.
REVIEW YOUR OFFERS
With offers in hand you can now compare rates and costs and get the best possible deal. Comparison shopping made easy. You fill out one form and lenders compete for your business.
CHOOSE YOUR LENDER
Congratulations! With the great learning tools we provide for you at MortgageLoanRateUpdate and the offers you have received, you've found the right product and the best rate.
ADVANTAGES OF USING
MORTGAGELOANRATEUPDATE
FAST & EASY. DATA ENCRYPTED
Applying to multiple lenders is fast and easy with our one simple questionnaire. Choose the product you’re looking for, take a few moments to answer a few questions and you’re on your way to saving.
NO OBLIGATION. NO HIDDEN FEES
Any of the services on our website are 100% free, there is no obligation to use our services or any hidden fees. We’re not loan brokers so we don’t charge broker fees like other websites.
NO SSN OR CREDIT
CHECK
No SSN or credit check is necessary to use our services. We bring lenders to you so they can compete for your business and you save. That information only becomes necessary after you choose a lender.