Re:The U.S. Housing Boom Is Coming to an End, Starting in Da...
by nostrademons on Tuesday November 27, 2018 @02:17AM
(#18540217)
As of 2017, 90% of mortgages in the U.S. were 30-year fixed. 6% were 15-year fixed. Only 2% were ARMs.
http://www.freddiemac.com/perspectives/sean_becketti/2017041...
People got burned bad by ARMs in the housing crash of 2009 and they still aren't willing to take the risk.
Re:The U.S. Housing Boom Is Coming to an End, Starting in Da...
by sokoloff on Tuesday November 27, 2018 @08:30AM
(#18542101)
Thanks for bringing data into the discussion!
("Yes and") There's also very little rate benefit to adjustable mortgages right now, so it's quite sensible to take a fixed rate mortgage. When I bought my first house (in 1996), I recall that fixed rate mortgages were several points higher than adjustable rate mortgages during their fixed portion. In cases like that, it made for an actual decision.
With both fixed rates and ARMs having roughly the same initial rates, there's little reason to choose adjustable.
That means that it's sufficient for the lower income tiers (relative to the house value) to have a few months of high interest rates (in a time frame of 15-25 years) in order to lose the house.
Buying at the current rates is risky, while the risk of rising rates in 1988 was much lower. Factoring that in should change your conclusion.