Americans Refinancing an ARM to a Fixed Rate Mortgage

Posted on | January 3, 2009 | 1 Comment

In April of 2006, 32% of mortgages were adjustable rate mortgages (ARM).  Fast forward 33 months and that number has dropped to 3%.  Just under three years ago, ONE THIRD of mortgages were ARMs and today only one THIRTY-third of mortgage are adjustable in their rate.  It is quite obvious that many borrowers have refinanced their ARM’s into a fixed rate mortgage.  Freddie Mac actually predicts the the percentage of adjustable rate mortgages will start to increase at the beginning of 2009.

When researching the percentage of loans that were adjustable in their rate shows just how deceived Americans were.  From January of 2004 to May of 2006, the percentage of adjustable rate mortgages was over 30% every single month.  The adjustable rate mortgage did not decrease under 20% of total loans until May of 2007.  The writing was on the wall in that May as the percentage started to drastically drop thereafter.  From May 2007 to November of 2008, adjustable rate mortgages dropped from 18% of total loans to just 3%.

It is amazing how enamoured Americans were in the housing bubble as over one third of them were willing to risk rate changes in the near future to access money for a home.  The major lesson that was learned during this housing disaster is to always look towards the future and know that stablibilty is often better then uncertainty.  Have you adjusted your ARM to a fixed rate mortgage?

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