More buyers are choosing ARMs
From Times wire reports
The portion of U.S. home buyers opting for adjustable-rate mortgages almost doubled in 2004 as surging home prices spurred more people to borrow at lower interest rates with shorter fixed periods.
The market share of home loans with adjustable rates, so-called ARMs, increased to 34% from 19% in 2003, according to Freddie Mac. It was the highest annual percentage since 1994, when the rate was 39%.
“This is an early-warning sign of potential dangers to come,” said Susan Wachter, a professor of real estate at the University of Pennsylvania. “The surge in ARMs opens a larger percentage of the population to vulnerability to short-term rate increases.”
