One of the big unknowns in residential real estate is what effect adjusting-rate mortgage loans will have on the real estate market, and on the entire US economy, as well.

The good news? For Massachusetts, it’s that we weren’t one of the top ten states to write adjustable-rate mortgage loans, last year.

The even better news? Less people took out ARMs in late 2006, than in previous years.

Is it enough to dodge the very big bullet facing many loan borrowers?

We will see …

Adjustable-rate mortgages are decreasing in popularity, but don’t count them out just yet.

New ARMs dropped to a 25 percent share of the market late last year, according to Freddie Mac’s annual ARM survey. That’s down from a high of 33 percent in 2004.

While one-year ARMs have fallen out of favor, hybrid ARMs have not. For example, 40 percent of all ARMs in the 2006 survey were “5/1” hybrids, according to Freddie Mac, with an average initial rate of 5.96 percent fixed for the first five years. Most of them never get past the reset date because they’re either refinanced or paid off, according to Frank Nothaft, chief economist for Freddie Mac.

In areas of the country where housing costs are high, ARMs are still popular. Here are the top 10 states by share of adjustable-rate mortgages, according to the Mortgage Bankers Association:

1. Nevada: 43 percent

2. California: 40 percent

3. District of Columbia: 35 percent

4. Arizona: 33 percent

5. Florida: 33 percent

6. Colorado: 33 percent

7. Illinois: 28 percent

8. Washington: 27 percent

9. Maryland: 26 percent

10. Virginia: 26 percent

Source: Top 10 States Where ARMs Remain Popular – By Kenneth Harney, Washington Post, by way of Realtor.org

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Updated: 1st Quarter 2018

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