That means when mortgage rates increase, many ARM loan holders, like Hernandez, experience the unpleasant shock of significantly higher monthly home payments. Mortgage rates have remained elevated, adding fuel to one of the most unaffordable housing markets in decades. To Hernandez, it made little sense to refinance the loan while the 30-year fixed mortgage rate remains higher than her new adjusted rate. This year, the Federal Reserve has signaled that it may possibly cut its benchmark interest rate one time. Marquis said that taking out an ARM loan might be worthwhile for those with a higher risk appetite.

Source: CNN July 01, 2024 13:40 UTC