Archana Pradhan | Source | Principal, Economist, Office of the Chief Economist at CoreLogic
Archana Pradhan
Principal, Economist, Office of the Chief Economist at CoreLogic
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CoreLogic
Principal, Economist, Office of the Chief Economist
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Adjustable-Rate Mortgages Gain Popularity Amid Surging Rates
As fixed-rate mortgages (FRMs) increase, some homebuyers are exploring alternatives like adjustable-rate mortgages (ARMs) and buydown points to reduce their monthly payments, particularly in the initial period of the loan. Each percentage point rise in mortgage rate means additional costs for homebuyers and results in higher monthly payments.
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Homebuyer Migration to Risky Climates Increased During the Pandemic
During the pandemic, some U.S. homebuyers relocated to areas that were more affordable or had better access to outdoor amenities, but this sometimes led to migration to riskier climates.
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Adjustable-Rate Mortgages Gain Popularity Amid Rising Rates
Archana notes, "As fixed-rate mortgages rise, some homebuyers are exploring ARMs to reduce initial payments." She highlights that ARMs' share has fluctuated between 4% and 25% since 2009, influenced by fixed-rate mortgage trends. While ARMs have a bad reputation from the 2008 crisis, today's risks are different. Declining mortgage rates in 2025 may mitigate some risks, making ARMs appealing for certain buyers.
