Adjustable-rate mortgages are hot enough these days to be the subject of a cartoon in The New Yorker (see next page).

The recent surge in interest rates has put an end to the binge in fixed-rate mortgages and refinancings and the market has shifted abruptly to adjustable rates and loans to buy homes.

This abrupt shift has left major participants in the mortgage market jockeying for position. The change has been a boon to portfolio lenders, which specialize in ARM loans and usually hold them in portfolio.

To get some insights into what impact the new adjustables market will be having on individual companies, American Banker talked to key executives at eight companies that play varied roles in the market.

One common thread was that many companies would be originating ARMs and selling them to portfolio lenders. For units of banks and thrifts, this includes their parent companies.

Another is that a new batch of adjustable-rate models is likely to be developed because of competitive conditions.

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