Buyers are taking on riskier adjustable rate mortgages as affordability worsens

As housing affordability worsens, more U.S. homebuyers are opting for adjustable rate mortgages (ARMs), which carry risks but offer initial savings. The Mortgage Bankers Association reports that ARMs now account for 7.8% of mortgage applications, the highest this year. With fixed mortgage rates rising due to persistent inflation, ARMs appear more attractive despite potential future rate increases.