Adjustable-Rate Mortgages Gain as Other Loans Fall

Mortgage specialist Jay Dacey

couldn't keep coaxing clients to take advantage of the low mortgage interest rates without hopping onto the bandwagon himself. But the 30-year-old from the Twin Cities-area took a route that might make one do a double-take. He refinanced out of a 30-year-fixed rate of 4.75 percent and into a 5-year interest-only adjustable rate mortgage with a 3.875 percent rate.

"My wife and I refinanced into an interest-only ARM because the lower payment allows us to build up savings and invest more while we are young," says Dacey, whose payments dropped from $1,750 a month to $1,065 per month. The ARM is set to adjust in June 2015. (See AOL Real Estate's guide "Refinancing Do's and Don'ts.")

While the refinance share of mortgage activity decreased to 80.5 percent of total applications from 81.9 percent the previous week, according to the latest survey by The Mortgage Bankers Association, activity in adjustable-rate mortgages rose to 6.2 percent from 6.1 percent of total applications.

So yes, there are people still taking out ARMs. But aren't ARMs what got us into this whole housing crisis, when people could no longer afford their homes at adjusted rates?