Discussion Paper

Why are Adjustable Rate Mortgages So Rare These Days?

Abstract: The fraction of mortgage borrowers who choose an adjustable-rate loan has fallen significantly over the past five years or so. Although the fraction edged up slightly in 2010, it remains close to historic lows, with less than 10 percent of mortgage originations since 2009 featuring an adjustable interest rate. What explains the striking decline? And what are its implications for borrowers and policymakers?

Keywords: Fannie Mae; mortgage; fixed-rate mortgages; Freddie Mac; adjustable-rate mortgages;

JEL Classification: D1; R3;

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Bibliographic Information

Provider: Federal Reserve Bank of New York

Part of Series: Liberty Street Economics

Publication Date: 2011-05-11

Number: 20110511