Up in ARMs: As Home Prices Grow, Risky Adjustable-Rate Mortgages Are Making a Comeback

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As home prices rise to new record heights and mortgage rates surge, homebuyers this spring are desperate to get their dream homes before they become even more out of reach. To do so, more are turning to a riskier type of home financing that was one of the causes of the Great Recession.

Adjustable-rate mortgages, commonly known as ARMs, entice borrowers with lower initial rates compared with traditional fixed-rate mortgages.

At a time when home prices are quickly rising, this can help some buyers become homeowners, which is why they’re becoming more popular with borrowers. But unlike traditional mortgages, which have a fixed …

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