Photo: SAUL LOEB / Getty Images
Home buyers are looking for options to stay in the market in the face of rising rates and escalating prices, and in this process they have begun to see adjustable rate mortgages as a viable option.
The most recent data confirms this, since only last March, variable rate mortgages represented the 12% of all mortgage loans that were made by volume in the United States.
This would show that common loans with fixed rates at 30 years are losing ground, mainly due to the rise in mortgage rates above the five percentage points.
According to the specialized company CoreLogic, the data for March for this type of variable-rate mortgages is the highest in market share since January 2020.
CoreLogic points out in an analysis published by the news AP, that the increase in their participation volume coincides with an increase in mortgage rates.
In recent months, the average weekly rate on a mortgage at 30 years dropped marginally to 5.25% from a 5.30%, just last week.
Although slightly down, current levels of mortgage rates exceed by more than two percentage points the levels they had a year ago, when the average rate was 3%.
An option before sky-high prices and rates
The operations ations with variable rate mortgages do not facilitate the buyer the qualification process for the credit; however, it does offer some flexibility for monthly payments in the early years of the loan.
“It is natural for homebuyers to look for ways to reduce the mortgage payment, and one of the ways is to use an adjustable rate mortgage,” said Selma Hepp, deputy chief economist at CoreLogic.
According to the expert, a person who buys a home under a adjustable rate will maintain a fixed rate during the first five years of the credit . Then, the loan will be adjusted to a variable rate, which can be higher or lower.
Although in recent months this type of credit has gained ground, they still have ample growth opportunity, considering that this type corresponds to 10% or 25% of all the loans valued in dollars of the last 12 years.
You may also like:
– 5 tips with which you can save money if you pay for technology apps and services
– 5 recommendations to avoid high taxes on your home in the US
– Inflation will last until 2023 , according to the forecast of the Congressional Budget Office