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January 14, 2007
Top Ten U.S. Areas by Share of Adjustable-Rate Mortgages
Some "top ten" data on the share of adjustable-rate mortgages in different U.S. jurisdictions. Scary stuff.1. Nevada, 43%
2. California, 40%
3. District of Columbia, 35%
4. Arizona, 33%
5. Florida, 33%
6. Colorado, 33%
7. Illinois, 28%
8. Washington, 27%
9. Maryland, 26%
10. Virginia, 26%
Source: Mortgage Bankers Association
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They are only scary if rates go up. A single point rise won't cause massive foreclosures but it will put a large dent into disposable household income meaning that consumer spending is leveraged to interest rates more than ever before.
The tripwire is more taut than we thought, that's scary.
Why are ARMs so "scary"?
Haven't they decreased the cost of home ownership? Since most have lock-ins of 3 - 5 years, they aren't catastrophic choices, even if rates go up. In the current non-volatile interest rate environment, ARMs don't seem so bad?
I'm surprised the numbers aren't higher.
If the chart was "interest-only" - that may be scary...