If you’ve been considering a mortgage with an adjustable rate, your reasons for going that route might be disappearing.
As recessionary fears cause longer-term interest rates to hover near or below short-term rates, the advantage that typically comes with adjustable rate mortgages has shrunk — or entirely disappeared — at some lenders. ARMs, as they are called, are based on short-term interest rates compared with fixed-rate mortgages’ reliance on longer-term rates.
“Normally I would say that if you only plan to own the house for, say, five years, maybe you could do a five-year ARM if rates are lower than a fixed rate — which they usually are,” said Ed Snyder, a certified financial planner and cofounder of Oaktree Financial Advisors in Carmel, Indiana.
Read more: Here’s why you might want to rethink getting an adjustable rate mortgage