Bloomberg's Megan McArdle argues that Adjustable-Rate Mortgages are equally as safe as fixed-rate mortgages, and dissects essential factors for borrowers to consider while selecting financing options.
This is approximately how the real world works: If you (the borrower) want someone (the lender) to take on more risk (by committing to a fixed interest rate), you have to pay them to do it (by paying an elevated interest rate). So while a fixed-rate product locks in the interest rate, it also locks in a premium for enjoying that lower interest rate. There is no free lunch.
Advertisement
Related Stories
Financing
Mortgage Rates Set to Remain Higher for Longer
After the Fed's announcement on Wednesday that it is holding interest rates steady, homebuyers hoping for lower mortgage rates will have to keep waiting
Financing
As Mortgage Rates Dip, Homeowners With High Rates Move to Refinance
A decrease in rates last week prompted a rise in refinancing by homeowners who obtained their mortgages at near-peak rates
Market Data + Trends
January's Mortgage Rate Dip Prompts Some Thawing of the Housing Market
A drop in mortgage rates from recent peaks nudged more homebuyers and sellers into the market, signaling the start of greater supply and demand