www.dqnews.com/RRCA1203.shtm
The percentage of buyers who financed with an ARM reached 523 percent in November, passing the halfway mark for the first time since February 1995 when 527 percent of all buyers chose ARMs. The all-time peak was in September 1988 when 661 percent financed with ARMS, according to DataQuick Information Systems. By choosing an ARM, the homeowner takes on risk as interest rates fluctuate. ARMs are typically cheaper, and are generally easier to qualify for than fixed-rate mortgages. ARMs were probably underused a year ago because of a risk averse financing environment. While interest rates have come up somewhat since summer, most of the current increase in ARM usage has to do with rising prices, said Marshall Prentice, DataQuick president. The median price paid for a California home was $324,000 in November, up 161 percent from $279,000 for the same month a year ago. The interest rate on a thirty-year fixed-rate mortgage with two points was 56 percent a year ago, it dipped to 48 percent last June, and is currently 55 percent. DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates, monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. The ARM percentages include all hybrid mortgages, which are typically home loans that have a fixed rate for several years, and a cap on how high they can adjust. ARM usage is highest in the Bay Area see chart, where homes are most expensive, and lowest in the Central Valley and rural areas where homes cost much less. The typical monthly mortgage payment that California home buyers committed themselves to paying was $1,478 in November. In April 1989 it reached $1,278 when interest rates were over eleven percent. Percentage of home buyers choosing adjustable-rate mortgages County/Region .
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