October 11th, 2016 11:17 AM by Eric Fang
The share of adjustable-rate mortgages held in portfolio hit an exceptionally high level in the second quarter of 2016.
An estimated $53.00 billion in ARMs were originated in 2Q16 and $4.69 billion in ARMs were included in mortgage-backed securities issued during the period. The ARM securitization rate in the second quarter was 8.8 percent, down from 13.9 percent for the same period last year.
ARM production is dominated by banks, which are increasingly holding the loans in portfolio. The volume of ARMs originated increased by 15.2 percent compared with the first quarter of 2016.
---> My explanation, ARM is still one of the most profitable products, and the risk is not high compared to the other fixed products. So do the banks expected the interest rates go up a little bit in the future. We would check the 3Q data to confirm the rate trend.