Great Lakes Bancorp of Ann Arbor, Mich., has introduced an adjustable-rate mortgage that limits any rate increase to 4 percentage points over the life of the loan. Conventional ARMs carry 6 point caps.

Consumers nationwide have been showing a marked preference for fixed-rate loans at today's rates, but thrifts prefer to avoid interest rate risk by originating adjustables.

Research by Great Lakes showed that concern over the life-of-the-loan interest rate was preventing homebuyers from using ARMs.

Despite the lower initial payments on ARMs as opposed to fixed-rate loans, many people were found to be apprehensive about a 6-point increase.

With Great Lakes currently offering ARMs at 4.95%, the rate could rise to 8.95% at most. Fixed-rate mortgages are being offered by many lenders at about 7.5%.

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