Adjustable Rate Mortgages have undergone facelifts over the years and it looks to continue that way in 2017. That being said, the changes they have undergone seem to be a slow hit.
"The Fed laid out a proposal for a 'new & improved' type of 30-year fixed rate mortgage – the COFI (cost of funds index) mortgage," according to Rob Chrisman.
"It is a 30-year fixed rate mortgage; however, it has restrictions on refinancing and equity extraction. Essentially, it is an ARM from the banks’ standpoint, and a 30-year fixed from the borrower’s standpoint."
The risks seem to be situational as it is with FRMs and from the looks of it, folks are still willing to take some of those risks.
"ARMs are more common among homebuyers borrowing large-balance mortgage loans than for those with smaller loans. Among mortgages of more than $1 million originated during Q1 2017, ARMs comprised 47 percent, up 4 percentage points from Q4 2016 (Figure 2)," according to Core Logic.
"Among mortgages in the $400,001-$1 million range, the ARM share was about 13 percent, up 3 percentage points from Q4 2016. However, among mortgages in the $200,001-$400,000 range, the ARM share was just 4 percent for Q1 2017, up 2 percentage points from the previous quarter."
Are ARMs the go to for your clients? To learn more about the growth of ARMs click on the image above.