Adjustable-rate mortgages, blamed for the mortgage crisis and since banished, are making what appears to be a comeback.
A Bank of America spokesman told the NY Times that ARMs now account for 10 percent of their production.
Of course, high-risk ARMs like the infamous option arm aren’t coming back (yet) – rather, hybrid ARMs such as the 5/1 and the 7/1 ARM are increasing in demand, per mortgage brokers cited by the publication.
This gives even the most risk-averse borrower some comfort, though if you plan to stay in your home for the long-haul, they aren’t necessarily the ticket.
Over five years, you’re looking at about $12,500 in savings, but then the rate goes adjustable – so obviously there is a fair amount of risk, especially since mortgage rates are historically low and will probably rise in the near future.
But still, for the short-term borrower, ARMs don’t sound as toxic as they used to.