Demand for riskier mortgages drops, as their advantages shrink

The interest rate gap between 30-year fixed mortgages and adjustable-rate mortgages (ARMs) has narrowed, according to market data. Adjustable-rate mortgages allow borrowers to pay a lower initial interest rate that changes after a set period. As the rate difference between fixed and adjustable loans has decreased, fewer borrowers are choosing ARMs.

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