They are, however, not without an element of risk. When interest rates are low The spread between adjustable rate and fixed rate mortgages is small. The likelihood of the adjustable rate increasing is relatively high.
Most borrowers prefer the safety and value of a fixed rate loan.
When interest rates increase The spread between adjustable rate and fixed rate mortgages is greater. The likelihood of the adjustable rate increasing is diminished, and the likelihood of a lower rate improves. The advantages of an adjustable rate become more desirable. All these loans are typically based on a 30 year amortization. Some ARMs have a different index.