Adjustable Rate Mortgages Fall Out of Favor

Adjustable rate mortgages were a popular option when housing prices were soaring a few years back. But they fell out of fashion by early 2009, when they represented just 3 percent of the market, as compared to the 70 percent market share they enjoyed in 1994, according to a New York Federal Reserve report. These days, adjustable rate mortgages, or ARMs, represent only 7 percent of all home loans, due to the combination of historically low interest rates and risk-averse homebuyers. Experts say they will come back into vogue when interest rates begin rising again.