Rising house prices are encouraging buyers to get creative to score lower mortgage interest rates. The share of shorter-term, adjustable-rate loans (ARMs) has doubled since the election.
CNBC reports that total mortgage application volume dropped 2.7 percent last week from the previous week, and that the seasonally adjusted rate is 12 percent lower than a year ago.
The 30-year fixed-rate mortgage was 4.46 percent as of last week, which is unchanged from earlier in the month but 75 basis points higher than in November 2016.
"Homebuyers in a strong housing market are looking for ways to extend their purchasing power, and ARMs are one way to do that," said Mike Fratantoni, chief economist for the MBA. "While the ARM share got as high as 35 percent precrisis, it is really unlikely it will get nearly as high now given [new] regulations, which effectively prohibit many types of ARMs that were prevalent then."