The ARM craze fuelling the last remnants of the Southern California housing bubble just keeps getting crazier.
Adjustable-rate mortgages (which offer lower initial interest rates and therefore lower monthly payments) accounted for 66.7% of [Los Angeles County] purchases in June, up from 59.8% in April. That increase tracks a corresponding rise in mortgage rates over the same period.Recall that in 2004:I ARMs constituted 45% of all new mortgages in the Los Angeles-Long Beach-Riverside metropolitan area, already one of the metro regions most dependent on ARMs. Two-thirds of all mortgages going ARM is, for the US, quite frankly the stratosphere.
Los Angeles home-buyers used ARMs at this pace once before in the last twenty years: 1988, just before the previous bubble popped.