Adjustable-rate loans became more popular in Greater Chicago in 1994, but not nearly as popular as elsewhere in the nation.
ARMs made up 28% of all mortgages in Greater Chicago in 1994, up from 17% the year before. Chicago borrowers chose ARMs more often than in 1993 for both purchases and refinances.
Nationally, 56% of home loans made in 1994 carried adjustable rates.
Home lending declined 28% last year in the Chicago area, to 285,682 loans. Of these, 81,365 were adjustable.
According to TRW REDI Property Data, a real estate information company in Riverside, Calif., Chicago home owners could have saved $2,200 on an average mortgage of $91,192 with an adjustable loan rather than a 30-year fixed loan. The average interest rate for a 30-year fixed was 8.36% in 1994, up from 5.34% for an adjustable loan.
In Lake County, where the average loan amount is 23% higher than in other areas, ARMs increased market share by 28%, according to TRW.
Home Savings of America had 5.4% of the adjustable loan market in Greater Chicago in 1994, with 4,016 loans totalling $476.9 million in 1994.
ARMs gained in Atlanta last year, but not as much as in Chicago, according to the data service. Sales of adjustables rose 4.6%, to 28.5% of the market.
In a hot mortgage market in the West, ARMs in Phoenix and Maricopa County increased in popularity from 14.3% in 1993 to 25.8% in 1994.