Adjustable Mortgages in State Down in February

The number of adjustable-rate mortgages taken out by California home buyers declined in February for the third consecutive month, a real estate research firm said Thursday.

In all, 51.9% of home buyers last month financed their purchase with adjustable loans, compared with 63.7% in January, 68.7% in December and 70.9% in November, according to DataQuick Information Systems.

The use of adjustable mortgages peaked statewide last May at 73.7%, DataQuick said.

Adjustable mortgages have lost some of their attraction as the spread between their rates and the interest rates on fixed-rate mortgages has shrunk, reflecting a convergence of short-term and long-term rates in the fixed-income securities market.

“More buyers are opting for a fixed-rate loan,” said Steve Hops of the California Mortgage Bankers Assn. Adjustable mortgages are considered risky because borrowers can end up paying more than they bargained for as the Federal Reserve increases interest rates.