This made me curious about how common adjustable rate mortgages are. I never considered one when I bought my house a million years ago because the risk bothered me. I wondered if others feel the same.
According to the Fed, about 8 percent of households have adjustable mortgages.
https://www.stlouisfed.org/on-the-ec...rate-mortgages
Surprisingly, it's more common among high-income households than low-income households according to that article. I would have assumed that lower-income households would be more willing to take the risk because they had no choice.
And if you look at fixed-rate mortgages as an approximation, rates are about 2.2 percent higher than they were five years ago according to this chart:
https://fred.stlouisfed.org/series/MORTGAGE30US
It seems like there's a little window of people for the next two years who'll get screwed by higher rates, but then they'll go down for people who bought after that. You'll also get a massive wave of people who got high fixed-rate loans over the past three years, and they'll be refinancing.
I don't think it'll be a large percentage of people who got adjustable rates in that two-year window and are about to get sodomized. Maybe that's enough to cause problems for the economy with defaults or maybe not. I don't know that kind of stuff. But I do think there'll be a lot more people who'll benefit by refinancing fixed loans down.
It's an interesting thing to think about.