The Disappearing ARM Mortgage

Adjustable rate mortgages (ARMs) use to be popular products. Recent news about many borrowers having difficulty meeting new payments when their adjustable rate mortgages were recast were likely contributors to the falloff in demand for these products. The decline in adjustable rate mortgages over time is remarkable.

Click Chart for Larger View and More Data

The chart above shows the monthly percentage of mortgages having adjustable rates. The percentage of fixed rate mortgages would be the difference from 100 for adjustable rate mortgages. The chart shows ARMs reached a peak (or fixed rate mortgages reached a low) in years 2004 and 2005. Isn't that the same time irrational exuberance peaked in mortgage lending?