Is an ARM or IO loan right for your borrowers in 2022?

Mortgage interest rates are rising and that means an already expensive homebuying process is going to feel even more out of reach for potential homebuyers. Giving borrowers options for how to finance one of the biggest purchases of their life is incredibly important both for the borrowers and for originators looking to remain competitive.

One option is an adjustable-rate mortgage (ARM). MAXEX data from the January Market Report shows that ARMs peaked in popularity in Q2 of 2021 as fixed rates started to briefly rise due to market volatility. While decreasing in share during the fall, we saw an uptick in December once again due to rising rates. With a rate of 2.66%, the 10-year ARM proved to be the most popular ARM term on the exchange in December.

Interest-only (IO) loans are another option in the non-QM space that could be beneficial for borrowers who are looking to get some flexibility with their buying power and cash flow. You can see the monthly cash-flow savings would be material with an ARM or IO loan as reflected in this $1 million loan example below.

Payment savings based on $1 million loan

MAXEX offers a variety of SOFR ARM loan terms across most programs as well as interest-only loans through the non-QM program. Check out the programs page on our website to learn more about the programs offered and how they could help your business in 2022.


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