WASHINGTON - Adjustable-rate mortgages continued to gain popularity
That was up from a 55% share in November and December, according to
The new increase was something of a surprise, as many analysts had
January's share of ARMs was the highest since November 1988, when 60% of
In January 1994, only 24% of home loans were ARMs.
Consumers have flocked to adjustable-rate mortgages since early last
As the difference between long-term and short-term rates has narrowed in
Keith Gumbinger, an analyst with HSH Associates, said January's share
Back then, the spread between short and long rates was about 3%. It has
As a result, Mr. Gumbinger said he expected February's numbers would
As in previous months, ARMs with long adjustment periods dominated the
In January, ARMs linked to one-year Treasuries, which were the most
Thrifts and banks led in ARM production.
Eighty-one percent of loans made by thrifts in January were ARMs. For
The average rate on fixed rate loans in January was 9.02%, up 0.2% from
The average rate on ARMs was 6.95%, up 0.12% from December 1994.
January's rate on fixed rate loans was nearly 2% higher than a year ago.