Real Estate News

Mixed news for ARMs in latest MBA survey

Published: 19 Apr 2017

As part of its regular forecasts, the Mortgage Bankers Association released a new statement describing the volume of mortgage applications seen this spring. In the April 19 release about the trend of applications, the MBA said that the Market Composite Index dropped by 1.8 percent. As in many of these statements, there were mixed figures, with some values increasing while others dipped.

While the USDA share of all housing applications stayed the same, both the Federal Housing Administration and Veterans Affairs shares declined, although both of these were by amounts of under 1 percent. Meanwhile, the refinance share of these total applications grew by .8 percent.

What was also notable was the decline for adjustable-rate mortgages. Though these are often seen as good options for buyers, current mortgages don't seem to be immune from the turbulence of the market. At the same time, the release said that 5/1 ARMs dropped by .06 percent to reach five-month lows for interest levels.

The flexibility of ARMs have always been part of their benefits, but there has still been the risk of less consistency to worry about. New York City mortgage sales manager for TD Bank North, Ray Rodriguez, recently spoke to the Wall Street Journal about this, explaining some of the new trends that could influence loan decisions.

"Today's interest-only loans don't have the toxic features for which these loans were once known, such as prepayment penalties and negative amortization that would raise the loan balance over time," he said.

The article also said that the interest-only options may play into the current hunger for more affordable loan types that fit the concerns of buyers. In today's market, flexibility may be a desirable trait for those unsure, even when ARM rates fluctuate with all the rest.