Adjustables accounted for 18% of all home mortgages in March, 4 percentage points more than in February, when their rates were closer to those on fixed-rate loans.

The February figure was an all-time low, according to figures compiled by the Federal Housing Finance Board.

Economists say that adjustable-rate loans will keep growing as a portion of the market for several months if rates remain at current levels.

Mark Zandi, chief economist of Regional Financial Associates, predicted that adjustables would make up 30% of all loans by May or June and remain at that level for the rest of the year.

Adjustables' increased popularity among consumers should cushion the effects of a weakening housing market during the rest of the year, Mr. Zandi said.

That popularity depends on two factors - the level of fixed-rate mortgages and the spread between fixed-rate mortgages and adjustables.

Mr. Zandi pointed out that "at the start of the year, not only was the fixed rate low - close to 7% - but the spread was very narrow."

"Being good economic agents, households picked fixed over ARM, and rightfully so," he said.

The run-up in long-term rates since mid-March has made fixed-rate mortgages more expensive - at or above 8% - he said, and the spread versus fixed loans has also widened. As a result, more consumers are turning to adjustables.

How is the run-up in adjustable share playing out at individual thrifts?

At Charter One Financial, Cleveland, adjustable-loan production went up in March and again in April, according to Richard D. Powers, senior vice president.

Adjustables were running at over half of Charter One's applications last month, versus something over one-third in March

Mr. Powers attributes the surge to the spread against fixed-rate loans. On Monday, Charter One's three-year Treasury adjustable stood at 7.25%, while the 30-year product was 1.125% higher. "From the borrowers' standpoint, when they start seeing those kinds of differences in rates, they start thinking twice about taking a fixed-rate loan," Mr. Powers said.

Overall, though, home loan applications were off at Charter One last month, because the refinancing business all but dried up, Mr. Powers said. Higher fixed rates have driven away consumers looking to refinance home loans. And because Charter One generally holds on to its fixed-rate loans, the drop in business will crimp the yield of its mortgage portfolio, he said.

On the other hand, it is easier to match deposits and other funding to the durations of adjustables, Mr. Powers said.

At Great Western Bank, Chatsworth, Calif., Sam Lyons, senior vice president of mortgage banking, said rates on fixed mortgages would have to climb some more before his thrift saw a surge in adjustables.

Mr. Lyons predicted that if conventional fixed-rate loans rise to 8.5% and jumbo loans to 9%, adjustable-rate business would pick up.

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