Adjustable-rate mortgages proved extremely popular in 2004

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Adjustable-rate mortgages proved extremely popular in 2004. Freddie Mac said this week that about 34 percent of all residential loans originated in 2004 were ARMs, the highest percentage in 10 years. The ARM story is an interesting one, because it is not what you would have expected. The Federal Reserve raised short-term interest rates five times last year (and is expected to keep doing so this year, at least for a while.) That should have made ARMs a relatively expensive proposition given that longer-term fixed rates actually moved very little in the same span.



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