Monday, April 5, 2010

Who Selects Adjustable Rate Mortgages?

Source: Harvard Business School Working Papers

Who Selected Adjustable-Rate Mortgages? Evidence from the 1989-2007 Surveys of Consumer Finances (PDF; 527 KB)

We find evidence that households selecting adjustable-rate mortgages (ARMs) during the recent decade were disproportionately those who were less suspicious or who may have had difficulty understanding complicated ARM features that became commonplace prior to the financial crisis.

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