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Do all those ARM's blow up the economy?

Do house prices fall, lowering taxes, which fucks City/County/State budgets?

ELI5, what would a 1-2% raise in the interest rates do to US housing?

Do all those ARM's blow up the economy? Do house prices fall, lowering taxes, which fucks City/County/State budgets? ELI5, what would a 1-2% raise in the interest rates do to US housing?

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[–] • 1 pt

Renewal? You mean ARMs?

[–] • 0 pt

They locked into a 5 year (typically) term at the start of the mortgage. When that term is up, they renew for another term that locks in the interest rate and payments for a period of time usually between 1 and 10 years.

[–] • 1 pt

What proportion of the mortgages are realistically done this way vs. a fixed %?

[–] • 1 pt

Most people (more than 90%) lock in a fixed rate, typically 4 or 5 years. The variable rates are lower, but if rates go up, so do your payments. Some mortgages have the ability to convert the variable rate to a fixed rate, most people don't want to worry about that and just lock in a fixed rate. It all depends on the lender though for the options available. Basically, when you get a mortgage, the lender sells that off to investors, who would prefer the rate locked in so that they know exactly how much money they will be earning in interest for however long the term is locked in for.