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Poll Shows Most Don’t Fear Effects of Adjustable-Rate Mortgages

Posted at November 1st, 2006 7:46 am by Richard Barber
Filed under: Adjustable-Rate Mortgages

ARMs: Perceived Well?An Associated Press-AOL Real Estate poll to determine public attitudes on mortgages (and particularly adjustable-rate mortgages) was conducted last month and is reported in the newest Business Week.

The 2,001 respondents included 289 people who bought a home in the last two years and 401 likely to buy a home within the next two years. Results were weighted to represent the population by demographic factors such as age, sex, region, race and income. Below is the breakdown:

QUESTION 1: ASKED OF HOMEOWNERS

1. Do you currently have a mortgage on your home, or not?

  • Yes, 62 percent
  • No, 38 percent

QUESTION 2: ASKED OF THOSE WHO HAVE A MORTGAGE

2. Is your mortgage an adjustable-rate mortgage or not?

  • Yes, 22 percent
  • No, 74 percent
  • Not sure, 4 percent

QUESTION 3: ASKED OF THOSE WHO HAVE AN ADJUSTABLE-RATE MORTGAGE

3. How concerned are you that you will not be able to afford to make your monthly home mortgage loan payments if your payments increase under your ARM?

  • Very concerned, 17 percent
  • Somewhat concerned, 19 percent
  • Not too concerned, 32 percent
  • Not at all concerned, 32 percent

TOTAL CONCERNED — 36 percent
TOTAL NOT CONCERNED — 64 percent

QUESTION 4: ASKED OF THOSE WHO ARE PLANNING TO BUY A HOUSE OR APARTMENT IN THE NEXT TWO YEARS

4. Will you seek an adjustable rate mortgage to finance your home purchase or not?

  • Yes, 35 percent
  • No, 60 percent
  • Not sure, 5 percent

As you can see, despite the heightened awareness and fears of mortgage rates rising among adjustable-rate loan holders, prospective buyers are not all that apprehensive going forward.

Of course, if managed properly, ARMs can be perfectly valuable resources — so perhaps there’s just a greater level of education among prospective buyers in regards to these products now than there was five years ago.

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One Response to “Poll Shows Most Don’t Fear Effects of Adjustable-Rate Mortgages”

  1. Brad Says:
    December 27th, 2006 at 12:09 pm

    Further proof that the Banking world has taught people adjustable rates are good. Even as the foreclosure rate in the U.S. soars to new highs. Banks will continue to offer loans as if to be a secured credit card with the teaser rate at the beginning of the term. Using the initial lower payment to seduce the customer into consolidating all of there debt under this “” great program “. The only people such programs benefit are those with minor degree’s in business management or mathematics and neither type person would be caught in one. These type programs are doing to the economy exactly what it was designed to do, put people into houses they can not afford thus showing a economic growth. What happens 2,3,5 years into it when the rate starts increasing ? What else, they attempt to sell and when that fails legal action for failure to pay kicks in. Foreclosure studies have shown the majority of foreclosures are on adjustable rate mortgages, not fixed rate. Wait until mid 2007 when foreclosure rates have hit even higher highs. The growth will not stop until the mathematically complex lending patterns do. my final simple question. If lending money makes the economy show power then how is it foreclosures are at an all time high and economists claim the economy is strengthening ?

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