REAL ESTATE
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A record high 54.5% of California’s home buyers chose adjustable-rate mortgages in September, and the percentage was even higher at 63.5% in Orange County.
The reason: adjustable-rate mortgages offer initial interest rates now that are 2% to 3% lower than fixed-rate mortgages, according to TRW Real Estate Market Information in Colton. The adjustable mortgages are now running at a little more than 7%, TRW said.
Counties with more expensive home prices tend to have higher percentages of adjustable mortgages. In expensive Orange County, the September rate was way above the 55.2% of borrowers who chose adjustable-rate mortgages a year ago.
But the popularity of adjustable rates could wane soon, TRW said. Thrifts are getting “fed up” with the low “teaser” rates on adjustable rate mortgages, and declines in the rate for fixed-rate mortgages are bringing them closer to the adjustable mortgages.
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